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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 22, 1997
REGISTRATION NO. 333-31457
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
U.S. HOME CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 21-0718930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 WEST LOOP SOUTH
HOUSTON, TX 77027
(713) 877-2311
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive offices)
ROBERT J. STRUDLER
CHAIRMAN AND CO-CHIEF EXECUTIVE OFFICER
U.S. HOME CORPORATION
1800 WEST LOOP SOUTH
HOUSTON, TX 77027
(713) 877-2311
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy to:
STEPHEN C. KOVAL, ESQ.
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
425 PARK AVENUE
NEW YORK, NEW YORK 10022
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: From time to time after the effective date of this Registration
Statement as determined by market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement from the same offering. / /
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If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered offering price per aggregate offering registration fee
registered unit price
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior, Senior $300,000,000 (1) 100% (1) $300,000,000 (1) $90,909.09 (2)(3)
Subordinated and/or
Subordinated Debt
Securities, Various
Series
=======================================================================================================
</TABLE>
(1) Estimated solely for purposes of determining the registration fee. If
any such Debt Securities are issued at an original issue discount, then
the amount to be registered shall be in such greater principal amount
as shall result in an aggregate initial offering price of up to
$300,000,000.
(2) An additional filing fee of $8,620.75 was previously paid for
$25,000,000 of unsold Debt Securities registered under Registration No.
33-00583.
(3) The filing fee was previously paid on filing the Registration Statement
on Form S-3 on July 17, 1997.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus included
herein contains a combined Prospectus that also relates to a total of
$25,000,000 of Debt Securities of the Registrant previously registered under the
Registrant's Registration Statement No. 33-00583 (which was declared effective
on February 8, 1996) and not issued. This Amendment No. 2 to No. 333-31457
Registration Statement constitutes Post-Effective Amendment No. 3 to the
Registrant's Registration Statement on Form S-3 No. 33- 00583 pursuant to which
the total amount of unsold Debt Securities previously registered under the
Registrant's Registration Statement on Form S-3 No. 33-00583 may be offered and
sold as Debt Securities, without limitation as to class, together with the Debt
Securities registered hereunder, through the use of the combined Prospectus
included herein relating to Debt Securities. In the event that any of such
previously registered Debt Securities are offered and sold prior to the
effective date of this Registration Statement, the amount of such Debt
Securities will not be included in any Prospectus hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 22, 1997
$325,000,000
U.S. HOME CORPORATION
Debt Securities
__________
U.S. Home Corporation ("U.S. Home" or the "Company") may offer
from time to time, in one or more series, its debt securities, consisting of
bonds, debentures, notes and/or other unsecured evidences of indebtedness. The
debt securities may consist of the Company's unsecured senior debt securities
(the "Senior Debt Securities"), unsecured senior subordinated debt securities
(the "Senior Subordinated Debt Securities") or unsecured subordinated debt
securities (the "Subordinated Debt Securities," and together with the Senior
Debt Securities and the Senior Subordinated Debt Securities, the "Debt
Securities"). The Debt Securities will have a maximum aggregate principal amount
of $325,000,000 and will be offered on terms to be determined at the time of
sale.
The specific terms of the Debt Securities in respect of which
this Prospectus is being delivered will be set forth in the supplement
accompanying this Prospectus (the "Prospectus Supplement") and will include,
where applicable, the specific title, the aggregate principal amount, the
currency, authorized denominations, the maturity, the rate (or method of
calculation) and time of payment of interest, if any, any redemption or sinking
fund provisions, any additional covenants or events of default, the initial
public offering price and the other material terms of the Debt Securities. The
Prospectus Supplement will also disclose whether the Debt Securities will be
listed on a national securities exchange and if they are not to be listed, the
possible effects thereof on their marketability.
Debt Securities may be offered by the Company directly to one
or more purchasers, through agents designated from time to time by the Company
or to or through underwriters and/or dealers. If any agent of the Company or any
underwriter or dealer is involved in the sale of the Debt Securities, the name
of such agent, underwriter or dealer and any applicable purchase price, fee,
commission or discount arrangement between or among them will be set forth, or
will be calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Debt Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and terms
of the offering of such series of Debt Securities.
Each Prospectus Supplement will describe any risks
associated with Debt Securities offered thereby or applicable to
the Company.
__________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
__________
The date of this Prospectus is _________________, 199
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Debt Securities
offered hereby. This Prospectus, which constitutes part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Debt Securities, reference is made to the Registration
Statement.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy and information statements and other
information with the Commission. The Registration Statement, as well as such
reports, proxy and information statements and other information filed by the
Company with the Commission, may be inspected and copied (at prescribed rates)
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at the Commission's regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New
York 10048. The Commission also maintains an Internet Web Site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding registrants that file electronically with the
Commission. In addition, such reports, proxy and information statements and
other information concerning the Company may also be inspected at the offices of
the New York Stock Exchange, at 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 1-5899) pursuant to the Exchange Act are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(ii) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997; and
(iii) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Debt Securities offered hereby shall
be deemed incorporated by reference into this Prospectus and to be a part hereof
from the date such documents are filed.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein will be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in the applicable Prospectus Supplement or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of each document incorporated herein by reference. Requests for
such copies should be directed to Kelly F. Somoza, Vice President, U.S. Home
Corporation, 1800 West Loop South, Houston, Texas 77027, (713) 877-2311.
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THE COMPANY
U.S. Home, organized in 1954 and incorporated in the State of Delaware
in 1959, is one of the largest single-family home builders in the United States
based on homes delivered. The Company currently builds and sells homes in more
than 215 new home communities in 31 market areas in 12 states. Since its
formation, the Company has delivered more than 271,000 homes. In 1996, the
Company was the fifth largest single-family on-site home builder in the United
States based on homes completed and delivered and has been among the ten largest
single-family on-site home builders in the United States for more than 20 years.
The Company conducts substantially all of its homebuilding business through U.S.
Home, the parent company.
The Company offers a wide variety of moderately-priced homes that are
designed to appeal to the affordable, move-up and retirement and active-adult
buyers. In each of its markets, the Company's primary strategy is to build
quality homes, utilizing its Zero Defect Program, which the Company believes
offers prospective home buyers a high level of new home value. The Company
believes that many home purchasers compare homes on the basis of location,
perceived quality and dollars of purchase price per square foot of living area.
As a result, the Company attempts to purchase land and lots in popular growth
corridors, maintain high quality standards and design homes to maximize living
space.
In addition to building and selling single-family homes, the Company
provides mortgage banking services to its customers. The Company originates,
processes and sells mortgages to third-party investors. The Company does not
retain or service the mortgages that it originates but, rather, sells the
mortgages and related servicing rights to investors.
The principal executive offices of the Company are located at 1800 West
Loop South, Houston, Texas 77027 (telephone: (713) 877-2311).
USE OF PROCEEDS
Unless otherwise set forth in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Debt Securities for
general corporate purposes.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to
fixed charges for the Company for the periods indicated:
<TABLE>
<CAPTION>
Six Months Ended
June 30, Fiscal Year Ended December 31,
---------------- ----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges 2.68 2.53 2.44 2.57 2.51 2.78 3.26
(unaudited) (1)............................
</TABLE>
- ----------------------------
(1) The ratio of earnings to fixed charges is calculated by dividing
earnings by fixed charges. For this purpose, "earnings" means income
(loss) before reorganization items plus (a) provision (benefit) for
income taxes, and (b) fixed charges (including the proportionate share
thereof of unconsolidated affiliates). "Fixed charges" means total
interest, whether capitalized or expensed, and the portion of rent
expense representative of interest costs (including the proportionate
share thereof of unconsolidated affiliates), plus (i) debt-related fees
and (ii) amortization of deferred financing costs.
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DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute direct, unsecured obligations of
the Company, unless otherwise provided in the applicable Prospectus Supplement.
Senior Debt Securities may be issued from time to time in series under an
indenture (the "Senior Indenture") between the Company and IBJ Schroder Bank &
Trust Company, as trustee (the "Trustee"). See "-- Concerning the Trustee." The
Senior Indenture has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. Senior Subordinated Debt Securities may be
issued from time to time in series under an indenture (the "Senior Subordinated
Indenture") between the Company and the Trustee. The Senior Subordinated
Indenture has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. Subordinated Debt Securities may be issued from time
to time in series under an indenture (the "Subordinated Indenture") between the
Company and the Trustee. The Subordinated Indenture has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part. The Senior
Indenture, the Senior Subordinated Indenture and the Subordinated Indenture are
sometimes referred to individually as the "Indenture" and collectively as the
"Indentures." The Indentures will be subject to and governed by the Trust
Indenture Act of 1939, as amended (the "TIA"). As used under this caption,
unless the context otherwise requires, "Offered Debt Securities" shall mean the
Debt Securities offered by this Prospectus and the accompanying Prospectus
Supplement; "Offered Senior Debt Securities" shall mean the Senior Debt
Securities so offered; "Offered Senior Subordinated Debt Securities" shall
mean the Senior Subordinated Debt Securities so offered and "Offered
Subordinated Debt Securities" shall mean Subordinated Debt Securities so
offered.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indentures, including the
definitions therein of certain capitalized terms used in this Prospectus. The
following sets forth certain general terms and provisions of the Debt Securities
to which any Prospectus Supplement may relate. Further terms of the Offered Debt
Securities will be described in the Prospectus Supplement. Except (i) with
respect to the covenants described herein for Senior Debt Securities and Senior
Subordinated Debt Securities, (ii) with respect to the provisions relating to
subordination and (iii) to the extent set forth in a Prospectus Supplement with
respect to a particular series of Debt Securities, the Indentures are
substantially identical. See "-- Senior Indenture Covenants", "-- Senior
Subordinated Indenture Covenants" and "-- Status of Debt Securities."
GENERAL
Each Indenture will provide for the issuance of Debt Securities in one
or more series. The Debt Securities will be unsecured senior, senior
subordinated or subordinated obligations of the Company, as set forth in the
accompanying Prospectus Supplement. Except as may be set forth in the
accompanying Prospectus Supplement and as described herein relating to the
Senior Indenture and the Senior Subordinated Indenture, the Indentures will not
restrict the business or operations of the Company or its subsidiaries, limit
their indebtedness or prohibit any liens, charges or other encumbrances on any
properties or other assets they may have from time to time. See "--Senior
Indenture Covenants" and "-- Senior Subordinated Indenture Covenants."
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the series of Offered Debt Securities in respect
of which this Prospectus is being delivered, if applicable: (i) the title of the
Offered Debt Securities; (ii) whether the Offered Debt Securities are Senior
Debt Securities, Senior Subordinated Debt Securities or Subordinated Debt
Securities; (iii) the aggregate principal amount of the Offered Debt Securities
and any limit on such aggregate principal amount; (iv) the person to whom
interest on an Offered Debt Security will be payable, if other than the person
in whose name the Offered Debt Security is registered on the record date for the
payment of such interest; (v) the date or dates, or method by which such date or
dates will be determined, on which the principal of the Offered Debt Securities
will be payable; (vi) the rate or rates at which the Offered Debt Securities
will bear interest, if any, or the method by which such rate or rates will be
determined; (vii) the date or dates from which interest, if any, will accrue, or
the method by which such date or dates will be determined, the interest payment
dates on which any such interest will be payable and the record date, if any,
for the interest payable on any Offered Debt Security on any interest payment
date, or the method by which such date or dates will be determined, and the
basis upon which interest will be calculated if other than on the basis of
actual days elapsed over a 365 or 366-day year; (viii) the place or places, if
any, other than or in addition to New York,
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New York, where the principal of and interest on Offered Debt Securities will be
payable, any Offered Debt Securities may be surrendered for registration of
transfer, any Offered Debt Securities may be surrendered for exchange and the
place or places where notices or demands to or upon the Company in respect of
the Offered Debt Securities and the applicable Indenture may be served; (ix) the
period or periods within, the price or prices at and the terms and conditions
upon, which the Offered Debt Securities may be redeemed or purchased, in whole
or in part, at the option of the Company; (x) the obligation, if any, of the
Company to redeem or repurchase the Offered Debt Securities pursuant to any
sinking fund or analogous provisions or at the option of a holder thereof and
the period or periods within which, the prices at which and the terms and
conditions upon which Offered Debt Securities will be redeemed or purchased, in
whole or in part, pursuant to such obligation; (xi) if other than denominations
of $1,000 and any integral multiple thereof, the denomination in which the
Offered Debt Securities will be issuable; (xii) the currency, currencies or
currency units in which payment of the principal of and interest on any Offered
Debt Securities will be payable if other than the currency of the United States
and the manner of determining the equivalent thereof in the currency of the
United States for purposes of the definition of "Outstanding" in the applicable
Indenture; (xiii) if the principal of or interest on any Offered Debt Securities
is to be payable, at the election of the Company or a holder thereof, in one or
more currencies or currency units other than that or those in which the Offered
Debt Securities are stated to be payable, the currency, currencies or currency
units in which payment of the principal of and interest on Offered Debt
Securities as to which such election is made will be payable, and the periods
within which and the terms and conditions upon which such election is to be
made; (xiv) if the amount of principal of or interest on any Offered Debt
Securities may be determined with reference to an index, the manner in which
such amounts will be determined; (xv) if other than the principal amount of the
Offered Debt Securities, the portion of the principal amount thereof which will
be payable upon declaration of acceleration of the maturity thereof; (xvi) if
the Offered Debt Securities will be issuable in whole or in part in the form of
one or more Global Securities (as defined) and, in such case, the Depository or
Depositories for such Global Security or Global Securities and any circumstances
other than those set forth herein in which any such Global Security may be
transferred to, and registered and exchanged for Offered Debt Securities
registered in the name of, a person other than the Depository for such Global
Security or a nominee thereof and in which any such transfer may be registered;
(xvii) if other than the Trustee, the identity of each paying agent and
registrar for the Offered Debt Securities; (xviii) any Events of Default (as
defined) with respect to the Offered Debt Securities, if not otherwise set forth
under the caption "-- Events of Default" or if different from these set forth
herein; (xix) any material covenants with respect to the Offered Debt
Securities, if not otherwise set forth herein or if different from those set
forth herein; (xx) the applicability of the provisions described under the
caption "-- Discharge of the Indenture"; and (xxi) any other material terms of
the Offered Debt Securities.
Debt Securities may be issued at a discount from their principal
amount. Federal income tax considerations and other special considerations
applicable to any such Offered Debt Securities will be described in the
applicable Prospectus Supplement.
If the purchase price of any of the Offered Debt Securities is
denominated in a foreign currency or currencies or a foreign currency unit or
units or if the principal of, or interest, if any, on, any series of Debt
Securities is payable in a foreign currency or currencies or a foreign currency
unit or units, the restrictions, elections, general tax considerations, specific
terms and other information with respect to such Offered Debt Securities and
such foreign currency or currencies or foreign currency unit or units will be
set forth in the applicable Prospectus Supplement.
GLOBAL SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, the
Offered Debt Securities will be issued as fully-registered securities in the
form of one or more global securities (each a "Global Security") registered in
the name of a nominee of The Depository Trust Company (the "Depository"). One
fully registered Global Security certificate will be issued for each issue of
the global securities, each in the aggregate principal amount of such issue, and
will be deposited with the Depository. If, however, the aggregate principal
amount of any issue of the global securities exceeds $200 million, one
certificate will be issued with respect to each $200 million of principal amount
and an additional certificate will be issued with respect to any remaining
principal
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amount of such issue. The identity of the nominee appointed by the Depository
will be set forth in the applicable Prospectus Supplement. The Global Security
will be issued in a denomination or aggregate denominations equal to the portion
of the aggregate principal amount of the outstanding Debt Securities of the
series represented by such Global Security. Except as described herein or in the
applicable Prospectus Supplement, Debt Securities will not be issued in
definitive form.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
Upon the issuance of a Global Security, the Depository or its nominee
will credit the accounts of persons holding through it with the respective
principal amounts of the Debt Securities represented by such Global Security.
Such accounts will be designated by the underwriter, if any, with respect to
Debt Securities placed by the underwriter for the Company. Ownership of
beneficial interests in a Global Security will be limited to persons that have
accounts with the Depository ("participants") or persons that may hold interests
through participants. Ownership of beneficial interests by participants in a
Global Security will be shown on, and the transfer of that ownership interest
will be effected only through, records maintained by the Depository for such
Global Security. Ownership of beneficial interests in such Global Security by
persons that hold through participants will be shown on, and the transfer of
that ownership interest through such participant will be effected only through,
records maintained by such participant. Beneficial owners of the Global Security
will not receive written confirmation from the Depository of their purchase of
the Global Security, but beneficial owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the participant through which the beneficial
owner entered into the transaction. Transfer of ownership interest in the Global
Security are to be accomplished by entries made on the books of participants
acting on behalf of beneficial owners. Beneficial owners will not receive
certificates representing their ownership interests in the Global Security,
except in the event that use of the book-entry system for the Global Security is
discontinued. The foregoing may impair the ability to transfer beneficial
interests in a Global Security.
To facilitate subsequent transfers, all Global Securities deposited by
participants with the Depository are registered in the name of the Depository's
nominee. The deposit of the Global Security with the Depository and their
registration in the name of the Depository's nominee effect no change in
beneficial ownership. The Depository has no knowledge of the actual beneficial
owners of the Global Security; the Depository's records reflect only the
identity of the direct participants (which include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations) to whose accounts the Global Security is credited, which may or
may not be the beneficial owners. The participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Except as provided in the applicable Prospectus Supplement, payment of
principal and interest, if any, on Debt Securities represented by any such
Global Security will be made to the Depository or its nominee, as the case may
be, as the sole registered holder of the Debt Securities represented thereby for
all purposes under the applicable Indenture. None of the Company, the Trustee,
any agent of the Company or the Trustee or the underwriter, if any, will have
any responsibility or liability for any aspect of the Depository's records
relating to or payments made on account of beneficial ownership interests in a
Global Security representing any Debt Securities or for maintaining, supervising
or reviewing any of the Depository's records relating to such beneficial
ownership interests.
The Company has been advised by the Depository that, upon receipt of
any payment of principal or interest on any Global Security, the Depository will
immediately credit, on its book-entry registration and transfer system, the
accounts of participants with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of the Depository. Payments by participants to owners of
beneficial interests in a Global Security held through such participants will be
governed by standing instructions and customary practices as is now the case
with securities held for customer accounts in bearer form or registered in
"street name," and will be the sole responsibility of such participants.
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Except as described in the applicable Prospectus Supplement, a Global
Security may not be transferred except as a whole by the Depository for such
Global Security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by such
Depository or any such nominee to a successor of such Depository or a nominee of
such successor. If the Depository is at any time unwilling or unable to continue
as depository and a successor depository is not appointed by the Company or the
Depository within 90 days, the Company will issue Debt Securities in definitive
form in exchange for the Global Security. In addition, the Company or the
Depository may at any time and in its sole discretion determine not to have the
Debt Securities represented by the Global Security and, in such event, the
Company will issue Debt Securities in definitive form in exchange for the Global
Security. In either instance, an owner of a beneficial interest in the Global
Security will be entitled to have Debt Securities equal in principal amount to
such beneficial interest registered in its name and will be entitled to physical
delivery of such Debt Securities in definitive form. Except as described in the
applicable Prospectus Supplement, Debt Securities so issued in definitive form
will be issued in denominations of $1,000 and integral multiples thereof and
will be issued in registered form only, without coupons. Except as described in
the applicable Prospectus Supplement, principal and interest, if any, on the
Debt Securities will be payable, and the Debt Securities may be presented for
registration of transfer or exchange, at the offices of the Trustee.
So long as the Depository for a Global Security, or its nominees, is
the registered owner of such Global Security, such Depository or such nominee,
as the case may be, will be considered the sole registered holder of the Debt
Securities represented by such Global Security for all purposes of receiving
payment on the Debt Securities, receiving notices and for all other purposes
under the Indenture and the Debt Securities. Beneficial interests in Debt
Securities will be evidenced only by, and transfers thereof will be effected
only through, records maintained by the Depository and its participants. Except
as provided above, owners of beneficial interests in a Global Security will not
be entitled to and will not be considered the registered holders thereof for any
purposes under the Indenture. Accordingly, any such person owning a beneficial
interest in such a Global Security must rely on the procedures of the
Depository, and, if any such person is not a participant, on the procedures of
the participant through which such person owns its interest, to exercise any
rights of a registered holder under the Indenture. The Indenture provides that
the Depository may grant proxies and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a registered holder is entitled to give or take under the
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of registered holders or that an
owner of a beneficial interest in such a Global Security desires to give or take
any action which a registered holder is entitled to give or take under the
Indenture, the Depository would authorize the participants holding the relevant
beneficial interest to give or take such action and such participants would
authorize beneficial owners owning through such participants to give or take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.
The Depository has advised the Company that the Depository is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered under
the Exchange Act. The Depository was created to hold the securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depository's participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations, some of whom (and/or their
representatives) own the Depository. Access to the Depository's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies, that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to the
Depositary and its participants are on file with the Commission.
The above-mentioned information concerning the Depository and its
book-entry system has been obtained from sources that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
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<PAGE> 10
STATUS OF DEBT SECURITIES
The Senior Debt Securities will be unsecured and unsubordinated
obligations of the Company and will rank on a parity with all other unsecured
and unsubordinated indebtedness of the Company. All series of Senior Debt
Securities of the Company issued under the Senior Indenture will rank on parity
in right of payment with each other, with indebtedness under the Company's
principal credit facility, with the Company's 9-3/4% senior notes due 2003,
previously issued in the original principal amount of $200,000,000 under an
Indenture, dated as of June 21, 1993, between the Company and IBJ Schroder Bank
& Trust Company, as trustee (the "1993 Senior Notes"), and with the Company's
7.95% senior notes due 2001, previously issued in the original principal amount
of $75,000,000 under an Indenture, dated as of February 16, 1996, between the
Company and IBJ Schroder Bank & Trust Company, as trustee (the "1996 Senior
Notes"). The Senior Debt Securities offered hereby will be senior in right of
payment to the Company's 4-7/8% convertible subordinated debentures due 2005,
previously issued in the original principal amount of $80,000,000 under an
Indenture, dated as of November 3, 1993, between the Company and Marine Midland
Bank, N.A., as trustee (the "Debentures").
The Senior Subordinated Debt Securities will be unsecured obligations
of the Company and will be subordinate and junior in right of payment, to the
extent and in the manner to be set forth in the Senior Subordinated Indenture to
the prior payment in full in cash (or cash equivalents) of amounts then due on
"Senior Indebtedness" of the Company. Except to the extent set forth in the
applicable Prospectus Supplement, the Senior Subordinated Indenture will define
"Senior Indebtedness" of the Company as the principal of (and premium, if any),
and interest on (including, without limitation, interest accruing subsequent to
the filing of a petition under applicable Bankruptcy Law (as defined in the
Senior Subordinated Indenture) or the appointment of a Custodian (as defined in
the Senior Subordinated Indenture)), (i) any and all indebtedness and
obligations of the Company (including indebtedness of others guaranteed by the
Company), whether or not contingent and whether or not outstanding on the Issue
Date (as defined in the Senior Subordinated Indenture) or thereafter created,
incurred or assumed (including, without limitation, all charges, fees, expenses
and other amounts incurred by or owing to holders of such indebtedness), which
(a) is for money borrowed, (b) is evidenced by any bond, note, debenture or
similar instrument, (c) represents the unpaid balance on the purchase price of
any property, business or asset of any kind, (d) is an obligation of the Company
as lessee under any and all leases of property, equipment or other assets
required to be capitalized on the balance sheet of the lessee under generally
accepted accounting principles, (e) is a reimbursement obligation of the Company
with respect to letters of credit, (f) is an obligation of the Company with
respect to an interest swap obligation or foreign exchange agreement or (g) is
an obligation of another secured by a lien to which any of the properties or
assets (including, without limitation, leasehold interests and any other
tangible or intangible property rights) of the Company is subject, whether or
not the obligations secured thereby shall have been assumed by the Company or
will otherwise be the Company's legal liability and (ii) any deferrals,
amendments, renewals, extensions, modifications and refundings of any
indebtedness or obligations of the types referred to in clause (i) of this
paragraph; provided that Senior Indebtedness will not include (A) the Senior
Subordinated Debt Securities or the Subordinated Debt Securities, (B) the
Debentures, (C) any indebtedness or obligation of the Company (or the instrument
creating or evidencing it) which expressly provides that such indebtedness is
not superior in right of payment to the Senior Subordinated Debt Securities, or
which expressly provides that such indebtedness is subordinate in right of
payment to all other indebtedness of the Company (including the Senior
Subordinated Debt Securities), (D) any indebtedness or obligation of the Company
to any of its subsidiaries and (E) any indebtedness or obligation incurred by
the Company in connection with the purchase of assets, materials or services in
the ordinary course of business and which constitutes a trade payable.
The Subordinated Debt Securities will be unsecured obligations of the
Company and will be subordinate and junior in right of payment, to the extent
and in the manner to be set forth in the Subordinated Indenture to the prior
payment in full in cash (or cash equivalents) of amounts then due on "Senior
Indebtedness" of the Company. Except to the extent set forth in the applicable
Prospectus Supplement, the Subordinated Indenture will define "Senior
Indebtedness" of the Company as the principal of (premium, if any), and interest
on (including, without limitation, interest accruing subsequent to the filing of
a petition under applicable Bankruptcy Law (as defined in the Subordinated
Indenture) or the appointment of a Custodian (as defined in the Subordinated
Indenture)), (i) any and all indebtedness and obligations of the Company
(including indebtedness of others guaranteed by the
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<PAGE> 11
Company), whether or not contingent and whether or not outstanding on the Issue
Date (as defined in the Subordinated Indenture) or thereafter created, incurred
or assumed (including, without limitation, all charges, fees, expenses and other
amounts incurred by or owing to holders of such indebtedness), which (a) is for
money borrowed, (b) is evidenced by any bond, note, debenture or similar
instrument, (c) represents the unpaid balance on the purchase price of any
property, business or asset of any kind, (d) is an obligation of the Company as
lessee under any and all leases of property, equipment or other assets required
to be capitalized on the balance sheet of the lessee under generally accepted
accounting principles, (e) is a reimbursement obligation of the Company with
respect to letters of credit, (f) is an obligation of the Company with respect
to an interest swap obligation or foreign exchange agreement or (g) is an
obligation of another secured by a lien to which any of the properties or assets
(including, without limitation, leasehold interests and any other tangible or
intangible property rights) of the Company is subject, whether or not the
obligations secured thereby shall have been assumed by the Company or will
otherwise be the Company's legal liability and (ii) any deferrals, amendments,
renewals, extensions, modifications and refundings of any indebtedness or
obligations of the types referred to in clause (i) of this paragraph; provided
that Senior Indebtedness will not include (A) the Subordinated Debt Securities,
(B) the Debentures, (C) any indebtedness or obligation of the Company (or the
instrument creating or evidencing it) which expressly provides that such
indebtedness is not superior in right of payment to the Subordinated Debt
Securities, or which expressly provides that such indebtedness is subordinate in
right of payment to all other indebtedness of the Company (including the
Subordinated Debt Securities), (D) any indebtedness or obligation of the Company
to any of its subsidiaries and (E) any indebtedness or obligation incurred by
the Company in connection with the purchase of assets, materials or services in
the ordinary course of business and which constitutes a trade payable.
The Senior Subordinated Debt Securities will constitute "Senior
Indebtedness" with respect to the Subordinated Debt Securities and the
Debentures.
The Senior Subordinated Indenture will provide that the Company will
not issue any indebtedness that is subordinated in right of payment to any
Senior Indebtedness of the Company and is senior in right of payment to the
Senior Subordinated Debt Securities. The Subordinated Indenture will not contain
a similar provision.
By reason of such subordination, in the event of dissolution,
winding-up, liquidation, insolvency, bankruptcy or other similar proceedings,
upon any distribution of assets of the Company: (i) holders of Senior
Indebtedness will be entitled to be paid in full before payments may be made on
Senior Subordinated Debt Securities and the Subordinated Debt Securities and the
holders of Senior Subordinated Debt Securities and Subordinated Debt Securities
will be required to pay over their share of such distributions to the holders of
Senior Indebtedness until such Senior Indebtedness is paid in full, except that
holders of Senior Subordinated Debt Securities and Subordinated Debt Securities
may receive securities that are subordinated at least to the same extent as such
Senior Subordinated Debt Securities or Subordinated Debt Securities, as the case
may be; (ii) in addition, holders of Senior Subordinated Debt Securities will be
entitled to be paid in full before payments may be made on Subordinated Debt
Securities and holders of Subordinated Debt Securities will be required to pay
over their share of such distributions to the holders of Senior Subordinated
Debt Securities until such Senior Subordinated Debt Securities are paid in full,
except that holders of Subordinated Debt Securities may receive securities that
are subordinated at least to the same extent as such Subordinated Debt
Securities; and (iii) creditors of the Company who are not holders of Senior
Subordinated Debt Securities or Subordinated Debt Securities may recover less,
ratably, than holders of Senior Indebtedness and may recover more, ratably, than
the holders of the Senior Subordinated Debt Securities or Subordinated Debt
Securities. Accordingly, such subordination may result in a reduction or
elimination of payments to the holders of all Senior Subordinated Debt
Securities and Subordinated Debt Securities.
Except as may otherwise be described in the applicable Prospectus
Supplement, no payment of principal or interest on any of the Offered Debt
Securities that are Senior Subordinated Debt Securities or Subordinated Debt
Securities may be made by the Company, nor may the Company acquire any Offered
Debt Securities that are Senior Subordinated Debt Securities or Subordinated
Debt Securities for cash or property (other than securities that are
subordinated at least to the same extent as such Senior Subordinated Debt
Securities or Subordinated Debt Securities, as the case may be), in each case
except as set forth in the Indenture for such Offered Debt Securities, if (i) a
default in the payment of principal, premium, if any, or interest on any
Designated Senior Indebtedness
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<PAGE> 12
occurs and continues beyond the applicable period of grace, if any, specified in
the applicable instrument, lease, contract, agreement or other document
evidencing such Designated Senior Indebtedness, or (ii) a default, other than a
payment default, with respect to any Designated Senior Indebtedness occurs and
is continuing that permits the holders of the Designated Senior Indebtedness to
accelerate its maturity and the Trustee receives a notice of the default from a
person permitted to give such notice under the Indenture requesting that payment
of principal or interest with respect to the Offered Debt Securities that are
Senior Subordinated Debt Securities or Subordinated Debt Securities be
prohibited; provided that the foregoing will not prohibit payments made in
accordance with the defeasance or satisfaction and discharge provisions of the
applicable Indenture from monies deposited with the Trustee in accordance with
such provisions prior to any such default, judicial proceeding or notice.
However, except as may otherwise be described in the applicable Prospectus
Supplement, the Company may resume payments in respect of the Offered Debt
Securities that are Senior Subordinated Debt Securities or Subordinated Debt
Securities and may acquire such Senior Subordinated Debt Securities or
Subordinated Debt Securities upon the earlier of (a) the date upon which the
default or event of default with respect to such Designated Senior Indebtedness
is cured or waived or ceases to exist or (b) in the case of an event of default
referred to in (ii) above, the expiration of 179 days after notice is received
(a "Payment Blockage Period"); provided that the terms of the Indenture
otherwise permit the payment or acquisition of such Offered Debt Securities at
the time in question. Only one Payment Blockage Period may be commenced within
any consecutive 365-day period in respect of the Offered Debt Securities that
are Senior Subordinated Debt Securities or Subordinated Debt Securities, and in
no event will a Payment Blockage Period extend beyond 179 days from the date
payment on such Offered Debt Securities is due. For the purpose of the
provisions described in this paragraph, no default which, to the knowledge of
certain specified authorized persons, existed or was continuing on the date of
the commencement of any Payment Blockage Period by such person, shall be made
the basis for the commencement of a subsequent Payment Blockage Period by such
person, whether or not within any consecutive 365-day period, unless such
default is cured or waived or ceases to exist, or the benefits of the provisions
of the applicable Indenture described in this paragraph are waived in writing by
such authorized persons for a period of not less than 90 consecutive days.
Except to the extent set forth in the applicable Prospectus Supplement, the
Senior Subordinated Indenture and the Subordinated Indenture will define
"Designated Senior Indebtedness" of the Company as (i) Senior Indebtedness of
the Company permitted to be incurred under the applicable Indenture under any
institutional credit agreement (including, the Company's existing principal
credit facility) and (ii) any other Senior Indebtedness permitted to be incurred
under the applicable Indenture the principal amount of which is $25,000,000 or
more.
Except as may otherwise be described in the applicable Prospectus
Supplement, the subordination provision described herein will not prevent the
occurrence of any Event of Default under the Senior Subordinated Indenture or
the Subordinated Indenture.
The Indentures for the 1993 Senior Notes and the 1996 Senior Notes and
the Company's principal credit facility restrict the acquisition by the Company
of its subordinated indebtedness, including any Senior Subordinated Debt
Securities or Subordinated Debt Securities.
For example, the Indentures for the 1993 Senior Notes and the 1996
Senior Notes contain similar covenants limiting the amount of "restricted
payments" made by the Company, including the acquisition of subordinated debt.
The amount of restricted payments permitted to be made by the Company will vary
depending upon, among other things, the Company's cumulative earnings and
restricted payments made other than acquisitions of subordinated debt (e.g.,
repurchases of stock by the Company). The Company's principal credit facility
generally prohibits the Company from acquiring subordinated debt, except for a
limited dollar basket or using the proceeds of new subordinated debt or equity
securities.
In addition, the claims of third parties to the assets of the Company's
subsidiaries incurring obligations to such third parties will be superior to
those of the Company as a stockholder, and therefore the Offered Debt Securities
may be deemed to be effectively subordinated to the claims of such third
parties.
CERTAIN COVENANTS OF THE COMPANY APPLICABLE TO BOTH SENIOR AND SENIOR
SUBORDINATED DEBT SECURITIES
Affirmative Covenants. In addition to such other covenants, if any, as
may be described in the applicable Prospectus Supplement and as described herein
relating to the Senior Indenture and the Senior Subordinated Indenture, the
Indentures for the Offered Debt Securities will require the Company, subject to
certain limitations described therein, to, among other things, do the following:
(i) pay the principal of, and interest on, the Offered Debt Securities when the
same shall be due and payable; (ii) maintain an office or agency where Offered
Debt Securities may be surrendered for payment or registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Offered Debt Securities and the Indentures may be served; (iii) deliver to the
Trustee copies of all reports filed with the Commission; (iv) deliver to the
Trustee annual officers' certificates with respect to the Company's compliance
with its obligations under each Indenture; (v) maintain its
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<PAGE> 13
corporate existence subject to the provisions described below under the captions
"-- Senior Indenture Covenants --Limitations on Mergers and Consolidations and
"-- Senior Subordinated Indenture Covenants -- Limitations on Mergers and
Consolidations;" (vi) pay its taxes when due except where such taxes are being
contested in good faith; and (vii) maintain insurance in at least such amounts
and against such risks as are usually and prudently insured against in the same
general area by companies engaged in the same or a similar business. Except as
may be set forth in the accompanying Prospectus Supplement and as described
herein relating to the Senior Indenture and the Senior Subordinated Indenture,
the Indentures will not restrict the business or operations of the Company or
its subsidiaries, limit their indebtedness or prohibit any liens, charges or
other encumbrances on any properties or other assets they may have from time to
time. See "-- Senior Indenture Covenants" and "-- Senior Subordinated Indenture
Covenants."
SENIOR INDENTURE COVENANTS
In addition to the other covenants set forth in the Prospectus and
except as otherwise provided in a Prospectus Supplement relating to the Offered
Senior Debt Securities, the Senior Indenture will include the following
covenants:
Reports to Holders of Senior Debt Securities. The Senior Indenture will
provide that as long as more than 10 percent of the original amount of the
Offered Senior Debt Securities is outstanding, the Company will (i) remain
subject to the requirements of Section 13 or 15(d) of the Exchange Act whether
or not it is required to do so by the provisions thereof and will file with the
Commission all periodic reports as may be required thereunder and (ii) file with
the Commission, and with the Trustee within 15 days after the Company is
required to file the same with the Commission, copies of the periodic reports
which the Company may be required to file with the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act. The Company will also make
such reports available to the Holders, prospective purchasers of the Offered
Senior Debt Securities, securities analysts and broker-dealers upon their
written request.
The Senior Indenture will also provide that in the event that (i) 10
percent or less of the original principal amount of the Offered Senior Debt
Securities are outstanding and (ii) the Company is not required to file with the
Commission such reports and other information referred to in the preceding
paragraph, the Company will furnish to the Trustee (A) within 120 days after the
end of each fiscal year, annual reports containing the information required to
be contained in Items 1, 2, 3, 5, 6, 7, 8 and 9 of the Annual Report on Form
10-K promulgated under the Exchange Act, or substantially the same information
required to be contained in comparable items of any successor form, (B) within
60 days after the end of each of the first three fiscal quarters of each fiscal
year, quarterly reports containing the information required to be contained in
the Quarterly Report on Form 10-Q promulgated under the Exchange Act, or
substantially the same information required to be contained in any successor
form, and (C) promptly from the time after the occurrence of an event which
would be required to be reported in the Current Report on Form 8-K if the
Company was required to file such Report, such other reports containing
information required to be contained in the Current Report on Form 8-K
promulgated under the Exchange Act, or substantially the same information
required to be contained in any successor form.
The Senior Indenture will also provide that the Company will also
comply with the other provisions of Section 314(a) of the TIA.
Limitations on Restricted Payments. The Senior Indenture will provide
that the Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Restricted Payment, directly or indirectly, after the
Issue Date if at the time of such Restricted Payment:
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(i) the amount of such Restricted Payment (the amount of such
Restricted Payment, if other than in cash, will be determined by the
Board of Directors of the Company), when added to the aggregate amount
of all Restricted Payments made after the Issue Date, exceeds the sum
of: (1) $100,000,000, plus (2) 50 percent of the Company's Consolidated
Net Income accrued during the period (taken as a single period) since
January 1, 1997 (or, if such aggregate Consolidated Net Income is a
deficit, minus 100 percent of such aggregate deficit), plus (3) the net
cash proceeds derived from the issuance and sale of Capital Stock of
the Company and its Restricted Subsidiaries that is not Disqualified
Stock (other than a sale to a Subsidiary of the Company) after the
Issue Date but only to the extent not applied under clause (d) of the
definition of "Restricted Payment" set forth herein, plus (4) 100
percent of the principal amount of any Indebtedness of the Company or a
Restricted Subsidiary that is converted into or exchanged for Capital
Stock of the Company that is not Disqualified Stock, plus (5) 100
percent of the aggregate amounts received by the Company or any
Restricted Subsidiary upon the sale, disposition or liquidation
(including by way of dividends) of any Investment but only to the
extent (x) not included in Consolidated Net Income in clause (i)(2)
above and (y) that the making of such Investment constituted a
Restricted Investment made pursuant to the provisions of the Senior
Indenture described in this paragraph, plus (6) 100 percent of the
principal amount of, or if issued at a discount the accreted value of,
any Indebtedness or other obligation that is the subject of a guaranty
by the Company which is released after the Issue Date, but only to the
extent that the granting of such guaranty constituted a "Restricted
Payment" under the definition thereof set forth in the Senior Indenture
and described herein; or
(ii) the Company would be unable to incur an additional $1.00
of Indebtedness under the Consolidated Fixed Charge Coverage Ratio set
forth under the caption "--Limitations on Additional Indebtedness"; or
(iii) a Default or Event of Default has occurred and is
continuing or occurs as a consequence thereof.
Notwithstanding the foregoing, the provisions of the Senior Indenture
described above will not prevent: (i) the payment of any dividend within 60 days
after the date of declaration thereof if the payment thereof would have complied
with the limitations of the Senior Indenture on the date of declaration or (ii)
the retirement of shares of the Company's Capital Stock or the Company's or a
Subsidiary of the Company's Indebtedness for, in exchange for or out of the
proceeds of a substantially concurrent sale (other than a sale to a Subsidiary
of the Company) of, other shares of its Capital Stock (other than Disqualified
Stock).
Limitations on Additional Indebtedness. The Senior Indenture will
provide that the Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any additional Indebtedness (other than Indebtedness
between the Company and its Restricted Subsidiaries which are Wholly Owned
Subsidiaries or among such Restricted Subsidiaries which are Wholly Owned
Subsidiaries), including Acquisition Debt, unless, after giving effect thereto
or the application of the proceeds therefrom, the (a) Company's Consolidated
Fixed Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0;
and (b) ratio of the Company's Indebtedness (excluding, for purposes of this
calculation, Non-Recourse Indebtedness) to Consolidated Tangible Net Worth on
the date thereof is not greater than 2.25 to 1.0.
Notwithstanding the foregoing, the provisions of the Senior Indenture
will not prevent: (i) in addition to the Indebtedness permitted to be Incurred
under clauses (ii), (iii) and (iv) of this sentence and Indebtedness permitted
to be Incurred under the provisions of the Senior Indenture described in the
preceding paragraph, the Company and/or any Restricted Subsidiary from Incurring
(A) Refinancing Indebtedness, (B) Non-Recourse Indebtedness, and (C)
Indebtedness Incurred for working capital purposes or to finance the
acquisition, holding or development of property by the Company and its
Restricted Subsidiaries (including, without limitation, the financing of any
related interest reserve) in the ordinary course of business in an aggregate
amount at any one time outstanding not to exceed $130,000,000 (excluding any
Indebtedness referred to in clauses (i)(A) and (i)(B), (ii), (iii) and (iv) of
this paragraph) less the amount of any Indebtedness repaid pursuant to the
provisions of the Senior Indenture described in clause (ii)(A) of the
first paragraph under the caption "-- Disposition of Proceeds of Asset Sales,"
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<PAGE> 15
(ii) Unrestricted Subsidiaries from Incurring Indebtedness, (iii) the Company
and its Restricted Subsidiaries from Incurring Indebtedness under any deposits
made to secure performance of tenders, bids, leases, statutory obligations,
surety and appeal bonds, progress statements, government contracts and other
obligations of like nature (exclusive of the obligation for the payment of
borrowed money), in each case Incurred in the ordinary course of business of the
Company or any Restricted Subsidiary consistent with past practice and (iv)
Restricted Subsidiaries from guaranteeing Indebtedness of the Company or another
Restricted Subsidiary; provided that the tangible net assets of all Restricted
Subsidiaries guaranteeing Indebtedness of the Company or other Restricted
Subsidiaries at the end of the fiscal quarter immediately preceding the date of
Incurring any such guaranty, as determined in accordance with GAAP, shall not
exceed 10% of the Company's Consolidated Tangible Net Assets.
Change of Control. The Senior Indenture will provide that, following
the occurrence of any Change of Control, the Company will so notify the Trustee
in writing by delivery of an Officers' Certificate and will offer to purchase (a
"Change of Control Offer") from all Holders, and will purchase from Holders
accepting such Change of Control Offer on the date fixed for the closing of such
Change of Control Offer (the "Change of Control Payment Date"), the Outstanding
Offered Senior Debt Securities at an offer price (the "Change of Control Price")
in cash in an amount equal to 101 percent of the aggregate principal amount
thereof plus accrued and unpaid interest, if any, to the Change of Control
Payment Date in accordance with the procedures set forth in the "Change of
Control" covenant of the Senior Indenture.
In addition, the Senior Indenture will provide that, within 30 days
after the date of any Change of Control, the Company (with written notice to the
Trustee) or the Trustee at the Company's request (and at the expense of the
Company), will send or cause to be sent by first-class mail, postage prepaid, to
all Holders on the date of the Change of Control at their respective addresses
appearing in the Security Register, a notice, prepared by the Company advising
such Holders of such occurrence and of such Holder's rights arising as a result
thereof. Such notice will contain all instructions and materials necessary to
enable such Holders to tender their Offered Senior Debt Securities to the
Company.
The Senior Indenture will also provide that:
(a) In the event of a Change of Control Offer, the Company
will only be required to accept Offered Senior Debt Securities in
denominations of $1,000 or integral multiples thereof.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than any restriction set forth in any agreement,
indenture, document or instrument relating to any Existing Indebtedness
or Refinancing Indebtedness with respect thereto) that would materially
impair the ability of the Company to make a Change of Control Offer.
Notwithstanding the foregoing, if a Change of Control Offer is made,
the Company will pay for Offered Senior Debt Securities tendered for
purchase in accordance with the provisions of the Senior Indenture
described under the caption "--Change of Control."
(c) Not later than one Business Day prior to the Change of
Control Payment Date in connection with which the Change of Control
Offer is being made, the Company will (i) accept for payment Offered
Senior Debt Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent money
sufficient, in immediately available funds, to pay the purchase price
of all Offered Senior Debt Securities or portions thereof so accepted
and (iii) deliver to the Paying Agent an Officers' Certificate
identifying the Offered Senior Debt Securities or portions thereof
accepted for payment by the Company. The Paying Agent will promptly
authenticate and mail or deliver to Holders of Offered Senior Debt
Securities so accepted payment in an amount equal to the Change of
Control Price of the Offered Senior Debt Securities purchased from each
such Holder, and the Company will execute and, upon receipt of an
Officers' Certificate of the Company, the Trustee will promptly
authenticate and mail or deliver to such Holder a new Offered Senior
Debt Security equal in principal amount to any unpurchased portion of
the Offered Senior Debt Security surrendered. Any Offered Senior Debt
Securities not so accepted will be promptly mailed or delivered by the
Paying Agent at the Company's expense to the Holder thereof. The
Company will publicly announce the results of the Change
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<PAGE> 16
of Control Offer on the Change of Control Payment Date. For purposes of
the provisions of the Senior Indenture described above, the Company
will choose a Paying Agent which will not be the Company or a
Subsidiary thereof. Any excess cash held by the Trustee after the
expiration of the Change of Control Offer will be returned to the
Company.
(d) Any Change of Control Offer will be conducted by the
Company in compliance with applicable law, including, without
limitation, Section 14(e) of the Exchange Act and Rule 14e-1
thereunder, if applicable.
There can be no assurance that sufficient funds will be available at
the time of a Change of Control to make any required repurchases. The Company's
failure to make any required repurchases in the event of a Change of Control
Offer will create an Event of Default under the Senior Indenture.
No quantitative or other established meaning has been given to the
phrase "all or substantially all" (which appears in the definition of Change of
Control) by courts which have interpreted this phrase in various contexts. In
interpreting this phrase, courts make a subjective determination as to the
portion of assets conveyed, considering such factors as the value of the assets
conveyed and the proportion of an entity's income derived from the assets
conveyed. Accordingly, there may be uncertainty as to whether a Holder of
Offered Senior Debt Securities can determine whether a Change of Control has
occurred and exercise any remedies such Holder may have upon a Change of
Control.
Limitations on Transactions with Affiliates. The Senior Indenture will
provide that the Company will not, and will not permit any of its Restricted
Subsidiaries to, make any loan, advance, guaranty or capital contribution to or
for the benefit of, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement or
understanding with, or for the benefit of, (i) any Affiliate of the Company or
any Affiliate of the Company's Restricted Subsidiaries or (ii) any Person (or
any Affiliate of such Person) holding 10 percent or more of the Common Equity of
the Company or any of its Restricted Subsidiaries (each an "Affiliate
Transaction"), except on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary, as the case may be, than those that could have
been obtained in a comparable transaction on an arms' length basis from a Person
that is not an Affiliate.
The Senior Indenture will also provide that the Company will not, and
will not permit any of its Restricted Subsidiaries to, enter into an Affiliate
Transaction involving or having a value of more than $10,000,000, unless in each
case such Affiliate Transaction has been approved by a majority of the
disinterested members of the Company's Board of Directors.
The Senior Indenture will also provide that the Company will not, and
will not permit any of its Restricted Subsidiaries to, enter into any Affiliate
Transaction involving or having a value of more than $20,000,000 unless the
Company has delivered to the Trustee an opinion of an Independent Financial
Advisor to the effect that the transaction is fair to the Company or the
relevant Restricted Subsidiary, as the case may be, from a financial point of
view.
The Senior Indenture will also provide that, notwithstanding the
foregoing, an Affiliate Transaction will not include (i) any contract, agreement
or understanding with, or for the benefit of, or plan for the benefit of,
employees or directors of the Company or its Subsidiaries (in their capacity as
such) that has been approved by the Company's Board of Directors, (ii) Capital
Stock issuances to members of the Board of Directors, officers or employees of
the Company or its Subsidiaries pursuant to plans approved by the stockholders
of the Company, (iii) any Restricted Payment otherwise permitted under the
provisions of the Senior Indenture described under the caption "--Limitations on
Restricted Payments", (iv) any transaction between the Company or a Restricted
Subsidiary and another Restricted Subsidiary, (v) any contract, agreement or
understanding as in effect on the Issue Date or any amendment thereto or any
transaction contemplated thereby (including any amendment thereto) or (vi) loans
or advances by the Company or any Restricted Subsidiary to Unrestricted
Subsidiaries which in an aggregate amount at any one time outstanding do not
exceed $50,000,000.
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<PAGE> 17
Limitations on Restrictions on Distributions from Restricted
Subsidiaries. The Senior Indenture will provide that the Company will not, and
will not permit any of its Restricted Subsidiaries to, create, assume or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction (other than encumbrances or restrictions imposed by
law or by judicial or regulatory action or by provisions in leases or other
agreements that restrict the assignability thereof) on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or any other interest or participation in, or measured by, its
profits, owned by the Company or any of its other Restricted Subsidiaries, or
pay interest on or principal of any Indebtedness owed to the Company or any of
its other Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its other Restricted Subsidiaries, or (iii) transfer any of its
properties or assets to the Company or any of its other Restricted Subsidiaries,
except for encumbrances or restrictions existing under or by reason of (a)
applicable law, (b) covenants or restrictions contained in Existing Indebtedness
as in effect on the Issue Date, (c) any restrictions or encumbrances arising in
connection with the Existing Credit Facility; provided that any such
restrictions and encumbrances relating to any extension or renewal of the
Existing Credit Facility are not more restrictive than those in the Existing
Credit Facility being extended or renewed, (d) any restrictions or encumbrances
arising in connection with Refinancing Indebtedness; provided that any
restrictions and encumbrances of the type described in this clause (d) that
arise under such Refinancing Indebtedness are not more restrictive than those
under the agreement creating or evidencing the Indebtedness being refunded or
refinanced, (e) any agreement restricting the sale or other disposition of
property securing Indebtedness permitted by the Senior Indenture if such
agreement does not expressly restrict the ability of a Subsidiary of the Company
to pay dividends or make loans or advances, (f) reasonable and customary
borrowing base covenants set forth in credit agreements evidencing Indebtedness
otherwise permitted by the Senior Indenture which covenants restrict or limit
the distribution of revenues or sale proceeds from real estate or a real estate
project based upon the amount of Indebtedness outstanding on such real estate or
real estate project and the value of some or all of the remaining real estate or
the project's remaining assets and (g) any restrictions under any instrument
creating or evidencing any Acquisition Debt that was permitted to be Incurred
pursuant to the Senior Indenture and the Offered Senior Debt Securities and
which (1) only apply to assets that were subject to such restrictions and
encumbrances prior to the acquisition of such assets by the Company or any of
its Restricted Subsidiaries and (2) were not created in connection with, or in
contemplation of, such acquisition, and any restrictions replacing those
permitted by this clause (g) which are not more restrictive than, and do not
extend to any Persons or assets other than the Persons or assets subject to, the
restrictions and encumbrances so replaced.
Maintenance of Consolidated Tangible Net Worth. The Senior Indenture
will provide that in the event that the Consolidated Tangible Net Worth of the
Company for any two consecutive fiscal quarters is less than $115,000,000,
within 30 days after the end of each such period the Company will so notify the
Trustee in writing by delivery of an Officers' Certificate and will offer to
purchase from all Holders (a "Net Worth Offer"), and will purchase from Holders
accepting such Net Worth Offer on the date fixed for the closing of such Net
Worth Offer (the "Net Worth Offer Date"), ten percent of the original
Outstanding principal amount of the Offered Senior Debt Securities (the "Net
Worth Amount") at an offer price (the "Net Worth Offer Price") in cash in an
amount equal to 100 percent of the principal amount thereof plus accrued and
unpaid interest, if any, to the Net Worth Offer Date, in accordance with the
procedures set forth in the "Maintenance of Consolidated Tangible Net Worth"
covenant of the Senior Indenture. To the extent that the aggregate amount of
Offered Senior Debt Securities tendered pursuant to a Net Worth Offer is less
than the Net Worth Amount relating thereto, then the Company may use the excess
of the Net Worth Amount over the amount of Offered Senior Debt Securities
tendered, or a portion thereof, for general corporate purposes.
The Senior Indenture will also provide that in the event that the
Consolidated Tangible Net Worth of the Company for any two consecutive fiscal
quarters is less than $115,000,000, within 30 days after the end of such period,
the Company (with written notice to the Trustee) or the Trustee at the Company's
request (and at the expense of the Company) will send or cause to be sent by
first-class mail, postage prepaid, to all Holders on the date of the end of the
second such consecutive fiscal quarter, at their respective addresses appearing
in the Security Register, a notice prepared by the Company advising such Holders
of such occurrence and of each Holder's rights arising as a result thereof. Such
notice will contain all instructions and materials necessary to enable Holders
to tender their Offered Senior Debt Securities to the Company.
15
<PAGE> 18
The Senior Indenture will also provide that:
(a) In the event that the aggregate principal amount of
Offered Senior Debt Securities surrendered by Holders exceeds the Net
Worth Amount, the Company will select the Offered Senior Debt
Securities to be purchased on a pro rata basis from all Offered Senior
Debt Securities so surrendered, with such adjustments as may be deemed
appropriate by the Company so that only Offered Senior Debt Securities
in denominations of $1,000, or integral multiples thereof, will be
purchased. To the extent that the Net Worth Amount remaining is less
than $1,000, the Company may use such Net Worth Amount for general
corporate purposes. Holders whose Offered Senior Debt Securities are
purchased only in part will be issued new Offered Senior Debt
Securities equal in principal amount to the unpurchased portion of the
Offered Senior Debt Securities surrendered.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than any restriction set forth in any agreement,
indenture, document or instrument relating to any Existing Indebtedness
or Refinancing Indebtedness with respect thereto) that would materially
impair the ability of the Company to make a Net Worth Offer.
Notwithstanding the foregoing, if a Net Worth Offer is made, the
Company will pay for Offered Senior Debt Securities tendered for
purchase in accordance with the provisions of the Senior Indenture
described under the caption "--Maintenance of Consolidated Tangible Net
Worth."
(c) Not later than one Business Day prior to the Net Worth
Offer Date in connection with which the Net Worth Offer is being made,
the Company will (i) accept for payment Offered Senior Debt Securities
or portions thereof tendered pursuant to the Net Worth Offer (on a pro
rata basis if required pursuant to the provisions of the Senior
Indenture described in paragraph (a) above), (ii) deposit with the
Paying Agent money sufficient, in immediately available funds, to pay
the purchase price of all Offered Senior Debt Securities or portions
thereof so accepted and (iii) deliver to the Paying Agent with an
Officers' Certificate identifying the Offered Senior Debt Securities or
portions thereof accepted for payment by the Company. The Paying Agent
will promptly after acceptance mail or deliver to Holders of Offered
Senior Debt Securities so accepted payment in an amount equal to the
Net Worth Offer Price of the Offered Senior Debt Securities purchased
from each such Holder, and the Company will execute and the Trustee
will promptly authenticate and mail or deliver to such Holder a new
Offered Senior Debt Security equal in principal amount to any
unpurchased portion of the Offered Senior Debt Security surrendered.
Any Offered Senior Debt Securities not so accepted will be promptly
mailed or delivered by the Paying Agent at the Company's expense to the
Holder thereof. The Company will publicly announce the results of the
Net Worth Offer on the Net Worth Offer Date. For purposes of the
provisions of the Senior Indenture described above, the Company will
choose a Paying Agent which will not be the Company or a Subsidiary
thereof. Any excess cash held by the Trustee after the expiration of
the Net Worth Offer will be returned to the Company.
(d) Any Net Worth Offer will be conducted by the Company in
compliance with applicable law, including, without limitation, Section
14(e) of the Exchange Act and Rule 14e-1 thereunder, if applicable.
There can be no assurance that sufficient funds will be available at
the time of a Net Worth Offer to make any required repurchases. The Company's
failure to make any required repurchases in the event of a Net Worth Offer will
create an Event of Default under the Senior Indenture.
Limitations on Mergers and Consolidations. The Senior Indenture will
provide that the Company will not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its assets
(including, without limitation, by way of liquidation or dissolution), or assign
any of its obligations thereunder or under the Offered Senior Debt Securities
(as an entirety or substantially an entirety in one transaction or series of
related transactions), to any Person unless: (i) the Person formed by or
surviving such consolidation or merger (if other than the Company), or to which
sale, lease, conveyance or other disposition or assignment will be made
(collectively, the "Successor"), is a solvent corporation or other legal entity
organized and existing under
16
<PAGE> 19
the laws of the United States or any state thereof or the District of Columbia,
and the Successor assumes by supplemental indenture in a form reasonably
satisfactory to the Trustee all of the obligations of the Company under the
Offered Senior Debt Securities and the Senior Indenture, (ii) immediately after
giving effect to such transaction, no Default or Event of Default under the
Senior Indenture has occurred and is continuing, (iii) immediately after giving
effect to such transaction and the use of any net proceeds therefrom on a pro
forma basis, the Consolidated Tangible Net Worth of the Company or the
Successor, as the case may be, would be at least equal to the Consolidated
Tangible Net Worth of the Company immediately prior to such transaction and (iv)
the Consolidated Fixed Charge Coverage Ratio, immediately after giving effect to
such transaction, would be such that the Company or the Successor, as the case
may be, would be entitled to Incur at least $1 of additional Indebtedness under
such Consolidated Fixed Charge Coverage Ratio test. However, any such
consolidation, merger, sale, lease, conveyance or disposition may result in a
Change of Control, thereby requiring the Company to make a Change of Control
Offer. See "-- Change of Control."
No quantitative or other established meaning has been given to the
phrase "all or substantially all" by courts which have interpreted this phrase
in various contexts. In interpreting this phrase, courts make a subjective
determination as to the portion of assets conveyed, considering such factors as
the value of the assets conveyed and the proportion of an entity's income
derived from the assets conveyed. Accordingly, there may be uncertainty as to
whether a Holder of Offered Senior Debt Securities can determine whether the
Company has sold, leased, conveyed or otherwise disposed of all or substantially
all of its assets and exercise any remedies such Holder may have upon the
occurrence of any such transaction.
Disposition of Proceeds of Asset Sales. The Senior Indenture will
provide, subject to the provisions of the Senior Indenture described under the
caption "-- Limitations on Mergers and Consolidations", that the Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
make any Asset Sale unless (i) the Company or the Restricted Subsidiary, as the
case may be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value for the shares or assets sold or otherwise
disposed of (which will be determined in good faith by the Board of Directors of
the Company); provided that the aggregate Fair Market Value of the consideration
received from any Asset Sale that is not in the form of cash or cash equivalents
will not, when aggregated with the Fair Market Value of all other noncash
consideration received by the Company and its Restricted Subsidiaries from all
previous Asset Sales since the Issue Date that has not been converted into cash
or cash equivalents, exceed five percent of the Consolidated Tangible Net Assets
of the Company at the time of the Asset Sale under consideration, and (ii) the
Company will apply the aggregate Net Proceeds received by the Company or any
Restricted Subsidiary from all Asset Sales occurring subsequent to the Issue
Date as follows: (A) to repay any outstanding Indebtedness of the Company that
is not subordinated to the Offered Senior Debt Securities, or other Indebtedness
of the Company, or to the payment of any Indebtedness of any Restricted
Subsidiary, in each case, within one year after such Asset Sale or (B) to
replace the properties and assets that were the subject of the Asset Sale or
properties and assets that (as determined by the Board of Directors of the
Company, whose determination will be conclusive) will be used in the businesses
existing on the Issue Date of the Company and its Restricted Subsidiaries or in
businesses reasonably related thereto within one year after such Asset Sale. The
amount of such Net Proceeds neither used to repay the Indebtedness described
above nor used or invested as set forth in the preceding sentence constitutes
"Excess Proceeds."
The Senior Indenture also will provide that, notwithstanding the
foregoing, to the extent the Company or any of its Restricted Subsidiaries
receives securities or other noncash property or assets as proceeds of an Asset
Sale, the Company will not be required to make any application of such noncash
proceeds required by the provisions of the Senior Indenture described in the
preceding paragraph until it receives cash or cash equivalent proceeds from a
sale, repayment, exchange, redemption or retirement of or extraordinary dividend
or return of capital on such noncash property. Any amounts deferred pursuant to
the preceding sentence will be applied in accordance with the provisions of the
Senior Indenture described in the preceding paragraph when cash proceeds are
thereafter received from a sale, repayment, exchange, redemption or retirement
of an extraordinary dividend or return of capital on such noncash property.
The Senior Indenture will also provide that, when the aggregate amount
of Excess Proceeds equals $5,000,000 or more, the Company will so notify the
Trustee in writing by delivery of an Officers' Certificate and
17
<PAGE> 20
will offer to purchase from all Holders (an "Excess Proceeds Offer"), and will
purchase from Holders accepting such Excess Proceeds Offer on the date fixed for
the closing of such Excess Proceeds Offer (the "Asset Sale Offer Date"), the
maximum principal amount (expressed as a multiple of $1,000) of Offered Senior
Debt Securities that may be purchased out of the Excess Proceeds, at an offer
price (the "Asset Sale Offer Price") in cash in an amount equal to 100 percent
of the principal amount thereof plus accrued and unpaid interest, if any, to the
Asset Sale Offer Date, in accordance with the procedures set forth in the
"Disposition of Proceeds of Asset Sales" covenant in the Senior Indenture. To
the extent that the aggregate amount of Offered Senior Debt Securities tendered
pursuant to an Excess Proceeds Offer is less than the Excess Proceeds relating
thereto, then the Company may use the Excess Proceeds which exceed the aggregate
amount of Offered Senior Debt Securities tendered pursuant to such Excess
Proceeds Offer for general corporate purposes. Upon completion of an Excess
Proceeds Offer, the amount of Excess Proceeds will be reset at zero.
In addition, the Senior Indenture will provide that, within 30 days
after the date on which the amount of Excess Proceeds equals $5,000,000 or more,
the Company (with notice to the Trustee) or the Trustee at the Company's request
(and at the expense of the Company) will send or cause to be sent by first-class
mail, postage prepaid, to all Holders on the date such Excess Proceeds equals
$5,000,000, at their respective addresses appearing in the Security Register, a
notice of such occurrence and of such Holders' rights arising as a result
thereof.
The Senior Indenture will also provide that:
(a) In the event the aggregate principal amount of Offered
Senior Debt Securities surrendered by Holders exceeds the amount of
Excess Proceeds, the Company will select the Offered Senior Debt
Securities to be purchased on a pro rata basis from all Offered Senior
Debt Securities so surrendered, with such adjustments as may be deemed
appropriate by the Company so that only Offered Senior Debt Securities
in denominations of $1,000, or integral multiples thereof, will be
purchased. To the extent that the Excess Proceeds remaining are less
than $1,000, the Company may use such Excess Proceeds for general
corporate purposes. Holders whose Offered Senior Debt Securities are
purchased only in part will be issued new Offered Senior Debt
Securities equal in principal amount to the unpurchased portion of the
Offered Senior Debt Securities surrendered.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than any restriction set forth in any agreement,
indenture, document or instrument relating to any Existing Indebtedness
or Refinancing Indebtedness with respect thereto) that would materially
impair the ability of the Company to make an Excess Proceeds Offer.
Notwithstanding the foregoing, if an Excess Proceeds Offer is made, the
Company will pay for Offered Senior Debt Securities tendered for
purchase in accordance with the provisions of the Senior Indenture
described under the caption "-- Disposition of Proceeds of Asset
Sales."
(c) Not later than one Business Day prior to the Asset Sale
Offer Date in connection with which the Excess Proceeds Offer is being
made, the Company will (i) accept for payment Offered Senior Debt
Securities or portions thereof tendered pursuant to the Excess Proceeds
Offer (on a pro rata basis if required pursuant to the provisions of
the Senior Indenture described in paragraph (a) above), (ii) deposit
with the Paying Agent money sufficient, in immediately available funds,
to pay the purchase price of all Offered Senior Debt Securities or
portions thereof so accepted and (iii) deliver to the Paying Agent an
Officers' Certificate identifying the Offered Senior Debt Securities or
portions thereof accepted for payment by the Company. The Paying Agent
will promptly mail or deliver to Holders of Offered Senior Debt
Securities so accepted payment in an amount equal to the Asset Sale
Offer Price of the Offered Senior Debt Securities purchased from each
such Holder, and the Company will execute and upon receipt of an
Officers' Certificate of the Company the Trustee will promptly
authenticate and mail or deliver to such Holder a new Offered Senior
Debt Security equal in principal amount to any unpurchased portion of
the Offered Senior Debt Security surrendered. Any Offered Senior Debt
Securities not so accepted will be promptly mailed or delivered by the
Paying Agent at the Company's expense to the Holder thereof. The
Company will publicly announce the results of the Excess Proceeds Offer
on the Asset Sale Offer
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<PAGE> 21
Date. For purposes of the provisions of the Senior Indenture described
above, the Company will choose a Paying Agent which will not be the
Company or a Subsidiary thereof.
(d) Any Excess Proceeds Offer will be conducted by the Company
in compliance with applicable law, including, without limitation,
Section 14(e) of the Exchange Act and Rule 14e-1 thereunder, if
applicable.
(e) Whenever Excess Proceeds are received by the Company, and
prior to the allocation of such Excess Proceeds pursuant to the
provisions of the Senior Indenture described under the caption
"--Disposition of Proceeds of Asset Sales", such Excess Proceeds will
be set aside by the Company in a separate account to be held in trust
for the benefit of the Holders; provided, however, that in the event
the Company will be unable to set aside such Excess Proceeds in a
separate account because of provisions of applicable law or any
agreement, indenture, document or instrument relating to Existing
Indebtedness or Refinancing Indebtedness with respect thereto, the
Company will not be required to set aside such Excess Proceeds.
There can be no assurance that sufficient funds will be available at
the time of an Excess Proceeds Offer to make any required repurchases. In
addition, the Company's principal credit facility imposes restrictions on the
Company's ability to purchase the Offered Senior Debt Securities. The Company's
failure to make any required repurchases in the event of an Excess Proceeds
Offer will create an Event of Default under the Senior Indenture.
Restrictions on Restricted Subsidiary Indebtedness. The Senior
Indenture will provide that the Company will not permit any Restricted
Subsidiaries to, directly or indirectly, Incur any additional Indebtedness after
the Issue Date other than: (i) Refinancing Indebtedness, (ii) Non-Recourse
Indebtedness, (iii) Indebtedness to the Company, (iv) any deposits made to
secure performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, progress statements, government contracts, and other obligations
of like nature (exclusive of the obligation for the payment of borrowed money),
in each case Incurred in the ordinary course of business of the Restricted
Subsidiary and (v) any guaranty of Indebtedness of the Company or another
Restricted Subsidiary; provided that the tangible net assets of all Restricted
Subsidiaries guaranteeing Indebtedness of the Company or other Restricted
Subsidiaries at the end of the fiscal quarter immediately preceding the date of
Incurring any such guaranty, as determined in accordance with GAAP, shall not
exceed 10 percent of the Company's Consolidated Tangible Net Assets.
Limitations and Restrictions on Issuance of Capital Stock of Restricted
Subsidiaries. The Senior Indenture will provide that the Company will not permit
any Restricted Subsidiaries to issue, or permit to be outstanding at any time,
Preferred Stock or any other Capital Stock constituting Disqualified Stock.
Limitations on Liens. The Senior Indenture will provide that the
Company will not, and will not permit any of its Restricted Subsidiaries to,
create, Incur, assume or suffer to exist any Liens, other than Permitted Liens,
on any of its or their assets, property, income or profits therefrom unless
contemporaneously therewith or prior thereto all payments due under the Senior
Indenture and the Offered Senior Debt Securities are secured on an equal and
ratable basis with the obligation or liability so secured until such time as
such obligation or liability is no longer secured by a Lien.
For purposes solely of this "Senior Indenture Covenants" section of
this Prospectus, the terms set forth below shall have the following meanings:
"Acquisition Debt" means Indebtedness of any Person existing at the
time such Person became a Subsidiary of the Company (or such Person is merged
into the Company or one of the Company's Subsidiaries) or assumed in connection
with the acquisition of assets from any such Person (other than assets acquired
in the ordinary course of business of the Company and its Subsidiaries),
including, without limitation, Indebtedness Incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary of the Company (but
excluding Indebtedness of such Person which is extinguished, retired or repaid
in connection with such Person becoming a Subsidiary of the Company).
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<PAGE> 22
"Affiliate" of any Person means any Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
such Person. For purposes of the Senior Indenture, each executive officer and
director of the Company and each Restricted Subsidiary will be an Affiliate of
the Company. In addition, for purposes of the Senior Indenture, control of a
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, the term "Affiliate" will
not include, with respect to the Company or any Restricted Subsidiary which is a
Wholly Owned Subsidiary of the Company, any Restricted Subsidiary which is a
Wholly Owned Subsidiary of the Company.
"Asset Sale" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger, consolidation or sale and
leaseback transaction, and whether by operation of law or otherwise) of any of
that Person's assets (including, without limitation, the sale or other
disposition of Capital Stock of any Subsidiary of such Person, whether by such
Person or such Subsidiary), whether owned on the Issue Date of the Offered
Senior Debt Securities or subsequently acquired in one transaction or a series
of related transactions, in which such Person and/or Subsidiaries receive cash
and/or other consideration (including, without limitation, the unconditional
assumption of Indebtedness of such Person and/or its Subsidiaries) having an
aggregate Fair Market Value of $5,000,000 or more as to such transaction or
series of related transactions; provided, however, (i) sales of homes and sales
of mortgages on homes in the ordinary course of business consistent with past
practices will not constitute Asset Sales, (ii) sales, leases, conveyances or
other dispositions, including, without limitation, exchanges or swaps, of real
estate or other assets in the ordinary course of business consistent with past
practices will not constitute Asset Sales, (iii) sales, leases, sale-leasebacks
or other dispositions of amenities and other improvements at the Company's or
its Subsidiaries' communities in the ordinary course of business consistent with
past practices will not constitute Asset Sales, and (iv) transactions between
the Company and any of its Restricted Subsidiaries which are Wholly Owned
Subsidiaries, or among such Restricted Subsidiaries which are Wholly Owned
Subsidiaries of the Company will not constitute Asset Sales.
"Board of Directors" means the board of directors of a Person or any
authorized committee of the board of directors of such Person.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" of any Person means any and all shares, rights to
purchase, warrants or options (whether or not currently exercisable),
participations, or other equivalents of or interests in (however designated) the
equity (which includes, but is not limited to, common stock, preferred stock and
partnership and joint venture interests) of such Person (excluding any debt
securities that are convertible into, or exchangeable for, such equity).
"Capitalized Lease Obligations" of any Person means any obligation of
such Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation will be the capitalized amount thereof determined in
accordance with GAAP.
"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or group of
Persons (within the meaning of Section 13(d)(3) of the Exchange Act) in one or a
series of transactions; provided that a transaction where the holders of all
classes of Common Equity of the Company immediately prior to such transaction
own, directly or indirectly, 50 percent or more of the aggregate voting power of
all classes of Common Equity of such Person or group immediately after such
transaction will not be a Change of Control, (ii) the acquisition by the Company
and/or any of its Subsidiaries of 50 percent or more of the aggregate voting
power of all classes of Common Equity of the Company in one transaction or a
series of related transactions, (iii) the liquidation or dissolution of the
Company; provided that a liquidation or dissolution of the Company which is part
of a transaction or series of related transactions that does not constitute a
Change of Control under the "provided"
20
<PAGE> 23
clause of clause (i) above will not constitute a Change of Control under this
clause (iii) or (iv) any transaction or a series of related transactions (as a
result of a tender offer, merger, consolidation or otherwise) that results in,
or that is in connection with, (a) any Person, including, a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) acquiring beneficial ownership
(as determined in accordance with Rule 13d-3 under the Exchange Act), directly
or indirectly, of 50 percent or more of the aggregate voting power of all
classes of Common Equity of the Company or of any Person that possesses
beneficial ownership (as determined in accordance with Rule 13d- 3 under the
Exchange Act), directly or indirectly, of 50 percent or more of the aggregate
voting power of all classes of Common Equity of the Company or (b) less than 50
percent (measured by the aggregate voting power of all classes) of the Common
Equity of the Company being registered under Section 12(b) or 12(g) of the
Exchange Act.
"Common Equity" of any Person means all Capital Stock of such Person
that is generally entitled (i) to vote in the election of directors of such
Person, or (ii) if such Person is not a corporation, to vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Consolidated Cash Flow Available for Fixed Charges" of the Company
means, for any period, the sum of the amounts for such period of (i)
Consolidated Net Income, plus (ii) Consolidated Income Tax Expense (other than
income tax expense (either positive or negative) attributable to extraordinary
and nonrecurring gains or losses on Asset Sales), plus (iii) Consolidated
Interest Expense, plus (iv) all depreciation, and without duplication,
amortization (including, without limitation, previously capitalized interest
amortized to cost of sales), plus (v) all other noncash items reducing
Consolidated Net Income for such period, minus (vi) all other noncash items
increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in accordance
with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, with
respect to any determination date, the ratio of (i) Consolidated Cash Flow
Available for Fixed Charges of the Company for the prior four full fiscal
quarters for which financial results have been reported immediately preceding
the determination date, to (ii) the aggregate Consolidated Interest Incurred of
the Company for the prior four fiscal quarters for which financial results have
been reported immediately preceding the determination date.
"Consolidated Income Tax Expense" of the Company for any period means
the income tax expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" of the Company for any period means the
Interest Expense of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Incurred" of the Company for any period means
the Interest Incurred of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" of the Company for any period means the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP;
provided that there will be excluded from such net income (to the extent
otherwise included therein), without duplication: (i) the net income (or loss)
of any Person (other than a Restricted Subsidiary) in which any Person
(including, without limitation, an Unrestricted Subsidiary) other than the
Company has an ownership interest, except to the extent that any such income has
actually been received by the Company or any Restricted Subsidiary in the form
of dividends or similar distributions during such period, (ii) except to the
extent includable in the Consolidated Net Income pursuant to the foregoing
clause (i), the net income (or loss) of any Person that accrued prior to the
date that (a) such Person becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or any of its Restricted Subsidiaries or (b) the
assets of such Person are acquired by the Company or any of its Restricted
Subsidiaries, (iii) the net income of any Restricted Subsidiary to the extent
that
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(but only so long as) the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of that income is not permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary during such period, (iv) in the case of a successor to the
Company by consolidation, merger or transfer of its assets, any earnings of the
successor prior to such merger, consolidation or transfer of assets and (v) the
gains (but not losses) resulting from (a) the acquisition of securities issued
by the Company or extinguishment of Indebtedness of the Company, (b) Asset Sales
and (c) other extraordinary items. Notwithstanding the foregoing, in calculating
Consolidated Net Income, the Company will be entitled to take into consideration
the tax benefits associated with any extraordinary loss, but only to the extent
such tax benefits are recognized by the Company. Consolidated Net Income will
exclude any noncash losses, whether or not extraordinary, incurred in connection
with the issuance of Capital Stock (other than Disqualified Stock) in exchange
for Indebtedness of the Company or its Wholly Owned Restricted Subsidiaries.
"Consolidated Tangible Net Assets" of the Company as of any date means
the total amount of assets of the Company and its Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less:
(i) Intangible Assets and (ii) appropriate adjustments on account of minority
interests of other Persons holding equity investments in Restricted
Subsidiaries, in the case of each of clauses (i) and (ii) above as reflected on
the consolidated balance sheet of the Company and its Restricted Subsidiaries as
of the end of the fiscal quarter immediately preceding such date.
"Consolidated Tangible Net Worth" of the Company as of any date means
the stockholders' equity (including any Preferred Stock that is classified as
equity under GAAP, other than Disqualified Stock) of the Company and its
Restricted Subsidiaries on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less the
amount of Intangible Assets reflected on the consolidated balance sheet of the
Company and its Restricted Subsidiaries as of the end of the fiscal quarter
immediately preceding such date.
"Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.
"Defeasance" has the meaning set forth in Section 11.02 of the Senior
Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final Maturity date of the Offered Senior Debt Securities; provided that any
Capital Stock which would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require the Company to repurchase or
redeem such Capital Stock upon the occurrence of a change of control occurring
prior to the final Maturity of the Offered Senior Debt Securities will not
constitute Disqualified Stock if the change of control provisions applicable to
such Capital Stock are no more favorable to the holders of such Capital Stock
than the provisions of the Senior Indenture described under the caption "Change
of Control" and such Capital Stock specifically provides that the Company will
not repurchase or redeem (or be required to repurchase or redeem) any such
Capital Stock pursuant to such provisions prior to the Company's repurchase of
Offered Senior Debt Securities pursuant to the "Change of Control" covenant set
forth in the Senior Indenture.
"Disqualified Stock Dividend" of any Person means, for any dividend
payable with regard to Disqualified Stock issued by such Person, the amount of
such dividend multiplied by a fraction, the numerator of which is one and the
denominator of which is one minus the maximum statutory combined federal, state
and local income tax rate (expressed as a decimal number between 1 and 0) then
applicable to such Person.
"Event of Default" has the meaning set forth under the caption "--
Events of Default."
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<PAGE> 25
"Existing Credit Facility" means the Amended and Restated Credit
Agreement, dated as of May 28, 1997, between the Company and the lenders named
therein and The First National Bank of Chicago, as Agent (together with the
documents related thereto (including, without limitation, any guaranty
agreements)), as such Facility may be amended, restated, supplemented or
otherwise modified from time to time, and includes any facility extending the
maturity of, increasing the total commitment of, or restructuring (including,
without limitation, the inclusion of additional borrowers thereunder that are
Subsidiaries of the Company and whose obligations thereunder are guaranteed by
the Company) all or any portion of, the Indebtedness under such Facility or any
successor or replacement facilities and includes any facility with one or more
agents or lenders refinancing or replacing all or any portion of the
Indebtedness under such Facility or any successor facilities.
"Existing Indebtedness" means all of the Indebtedness of the Company
and its Subsidiaries that is outstanding on the Issue Date.
"Fair Market Value" with respect to any asset or property means the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on the Issue Date.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement relating to interest rates or foreign exchange
rates.
"Holder" means a Person in whose name an Offered Senior Debt Security
is registered.
"Incur" means to, directly or indirectly, create, incur, assume,
guaranty, extend the maturity of, or otherwise become liable with respect to any
Indebtedness.
"Indebtedness" of any Person at any date means, without duplication,
(i) all indebtedness of such Person for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (or
reimbursement obligations with respect thereto), other than standby letters of
credit issued for the benefit of, or surety and performance bonds issued by,
such Person in the ordinary course of business, (iv) all obligations of such
Person with respect to Hedging Obligations (other than those that fix or cap the
interest rate on variable rate indebtedness otherwise permitted by the Senior
Indenture or that fix the exchange rate in connection with indebtedness
denominated in a foreign currency and otherwise permitted by the Senior
Indenture and other than the purchase of mortgage commitments in the ordinary
course of business), (v) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, including, without limitation,
all conditional sale obligations of such Person and all obligations under any
title retention agreement (except trade payables and accrued expenses incurred
in the ordinary course of business), (vi) all Capitalized Lease Obligations of
such Person, (vii) all indebtedness of others secured by a Lien on any asset of
such Person, whether or not such indebtedness is assumed by such Person, (viii)
all indebtedness of others guaranteed by, or otherwise the liability of, such
Person to the extent of such guaranty or liability, and (ix) all Disqualified
Stock issued by such Person (the amount of indebtedness represented by any
Disqualified Stock will equal the greater of the voluntary or involuntary
liquidation preference plus accrued and unpaid dividends). The amount of
indebtedness of any Person at any date will be (a) the outstanding balance at
such date of all unconditional obligations as described above, (b) the maximum
liability of such Person for any contingent obligations under clause (v) above
and (c) in the case of clause (vii) (if the indebtedness referred to therein is
not assumed by such Person), the lesser of the (A) Fair
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Market Value of all assets subject to a Lien securing the indebtedness of others
on the date that the Lien attaches and (B) amount of the indebtedness secured.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
reasonable judgment of the Company's Board of Directors, (i) qualified to
perform the task for which it has been engaged, and (ii) disinterested and
independent with respect to the Company, all of its Subsidiaries, and each
Affiliate of the Company and/or its Subsidiaries that is involved in the
Affiliate Transaction with respect to which such firm has been engaged.
"Intangible Assets" of the Company means all unamortized debt discount
and expense, unamortized deferred charges, goodwill, patents, trademarks,
service marks, trade names, copyrights, write-ups of assets over their carrying
value at the end of the last fiscal quarter ended prior to the Issue Date or the
date of acquisition, if acquired subsequent thereto, and all other items which
would be treated as intangibles on the consolidated balance sheet of the Company
and its Restricted Subsidiaries prepared in accordance with GAAP.
"Interest Expense" of any Person for any period means, without
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included on Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit securing
financial obligations and bankers' acceptance financing, the net costs
associated with Hedging Obligations, amortization of other financing fees and
expenses, the interest portion of any deferred payment obligation, amortization
of discount or premium, if any, and all other noncash interest expense other
than interest and other charges amortized to cost of sales) and includes, with
respect to the Company and its Restricted Subsidiaries, without duplication
(including duplication of the foregoing items), all interest included as a
component of cost of sales for such period, and (ii) the amount of Disqualified
Stock Dividends recognized by the Company on any Disqualified Stock whether or
not paid during such period.
"Interest Incurred" of any Person for any period means, without
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included on Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit securing
financial obligations and bankers' acceptance financing, the net costs
associated with Hedging Obligations, amortization of other financing fees and
expenses, the interest portion of any deferred payment obligation, amortization
of discount or premium, if any, and all other noncash interest expense other
than interest and other charges amortized to cost of sales) and includes, with
respect to the Company and its Restricted Subsidiaries, without duplication
(including duplication of the foregoing items), all capitalized interest for
such period, all interest attributable to discontinued operations for such
period to the extent not set forth on the income statement under the caption
"interest expense" or any like caption, and all interest actually paid by the
Company or a Restricted Subsidiary under any guaranty of Indebtedness
(including, without limitation, a guaranty of principal, interest or any
combination thereof) of any other Person during such period and (ii) the amount
of Disqualified Stock Dividends recognized by the Company on any Disqualified
Stock whether or not declared during such period.
"Investments" of any Person means all (i) investments by such Person in
any other Person in the form of loans, advances or capital contributions, (ii)
guarantees of Indebtedness or other obligations of any other Person by such
Person, (iii) purchases (or other acquisitions for consideration) by such Person
of Indebtedness, Capital Stock or other securities of any other Person and (iv)
other items that would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet of such Person determined in accordance with GAAP.
"Issue Date" means the date of original issuance of the Offered Senior
Debt Securities.
"Legal Holiday" means Saturday, Sunday or a day on which banking
institutions in New York, New York or at a Place of Payment are authorized or
obligated by law, regulation or executive order to remain closed. If a
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<PAGE> 27
payment date is a Legal Holiday at a Place of Payment, payment shall be made at
that place on the next succeeding day that is not a Legal Holiday and no
interest shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind upon or in
respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including, without limitation, any conditional sale or
other title retention agreement, and any lease in the nature thereof, any option
or other agreement to sell, and any filing of, or agreement to give, any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Maturity", when used with respect to an Offered Senior Debt Security,
means the date on which the principal of such Offered Senior Debt Security or an
installment of principal becomes due and payable as therein provided or provided
in the Senior Indenture, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Proceeds" means cash (in U.S. dollars or freely convertible into
U.S. dollars) received by the Company or any Restricted Subsidiary from an Asset
Sale net of (i)(a) all brokerage commissions, investment banking fees and all
other fees and expenses (including, without limitation, fees and expenses of
counsel and investment bankers) related to such Asset Sale, (b) provisions for
all income and other taxes measured by or resulting from such Asset Sale, (c)
payments made to retire Indebtedness where payment of such Indebtedness is
required in connection with such Asset Sale, (d) amounts required to be paid to
any Person (other than the Company or a Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (e) appropriate
amounts to be provided by the Company or any Restricted Subsidiary thereof, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary thereof, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected in
an Officers' Certificate delivered to the Trustee, and (ii) all noncash
consideration received by the Company or any of its Restricted Subsidiaries from
such Asset Sale upon the liquidation or conversion of such consideration into
cash, without duplication, net of all items enumerated in subclauses (a) through
(e) of clause (i) hereof.
"Non-Recourse Indebtedness" means Indebtedness of the Company or a
Restricted Subsidiary for which (i) the sole legal recourse for collection of
principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was Incurred within 90 days after the acquisition of such property
and (ii) no other assets of the Company or such Restricted Subsidiary may be
realized upon in collection of principal or interest on such Indebtedness.
"Officer" means the Chairman of the Board, the President, the Senior
Vice President, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary, any Assistant Secretary or any Vice President of a Person.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the Person's Chief Executive Officer (or Co-Chief Executive
Officer), Chief Operating Officer, Chief Financial Officer or Chief Accounting
Officer.
"Outstanding", when used with respect to Offered Senior Debt
Securities, means, as of the date of determination, all Offered Senior Debt
Securities theretofore authenticated and delivered under the Senior Indenture,
except:
(i) Offered Senior Debt Securities theretofore canceled by the
Trustee or delivered to the Trustee for cancellation;
(ii) Offered Senior Debt Securities for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company)
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<PAGE> 28
in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such
Offered Senior Debt Securities; provided that, if such Offered Senior
Debt Securities are to be redeemed, notice of such redemption has been
duly given pursuant to the Senior Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Offered Senior Debt Securities as to which the
Defeasance has been effected pursuant to the defeasance provisions, if
any, of the Senior Indenture; and
(iv) Offered Senior Debt Securities which have been paid
pursuant to the "Mutilated, Destroyed, Lost and Stolen Securities"
section of the Senior Indenture or in exchange for or in lieu of which
other Offered Senior Debt Securities have been authenticated and
delivered pursuant to the Senior Indenture, other than any such Offered
Senior Debt Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Offered
Senior Debt Securities are held by a bona fide purchaser in whose hands
such Offered Senior Debt Securities are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Offered Senior Debt Securities have given
any request, demand, authorization, direction, notice, consent or waiver under
the Senior Indenture, (a) the principal amount of an Offered Senior Debt
Security denominated in one or more foreign currencies or currency units shall
be the U.S. dollar equivalent, determined in the manner provided as contemplated
by Section 3.01 of the Senior Indenture on the Issue Date, of the principal
amount of such Offered Senior Debt Security, and (b) Offered Senior Debt
Securities owned by the Company or any other obligor of the Offered Senior Debt
Securities or any Subsidiary of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Offered Senior Debt
Securities which the Trustee knows to be so owned shall be so disregarded.
Offered Senior Debt Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Offered Senior
Debt Securities and that the pledgee is not the Company or any other obligor
upon the Offered Senior Debt Securities or any Subsidiary of the Company or of
such other obligor.
"Paying Agent" means any Person, including the Company, authorized by
the Company to pay the principal of or any interest on any Offered Senior Debt
Security.
"Permitted Investment" of any Person means any Investment of such
Person in (i) direct obligations of the United States or any agency thereof or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within 180 days of the date of acquisition thereof, (ii) certificates
of deposit maturing within 180 days of the date of acquisition thereof issued by
a bank, trust company or savings and loan association which is organized under
the laws of the United States or any state thereof having capital, surplus and
undivided profits aggregating in excess of $250 million and a Keefe Bank Watch
Rating of C or better (or a similar rating by any successor thereof), (iii)
certificates of deposit maturing within 180 days of the date of acquisition
thereof issued by a bank, trust company or savings and loan association
organized under the laws of the United States or any state thereof other than
banks, trust companies or savings and loan associations satisfying the criteria
in (ii) above; provided that the aggregate amount of all certificates of deposit
issued to the Company at any one time by such bank, trust company or savings and
loan association will not exceed $100,000, (iv) commercial paper given the
highest rating by two established national credit rating agencies and maturing
not more than 180 days from the date of the acquisition thereof, (v) repurchase
agreements or money-market accounts which are fully secured by direct
obligations of the United States or any agency thereof and (vi) in the case of
the Company and its Subsidiaries, any receivables or loans taken by the Company
or a Subsidiary in connection with the sale of any asset otherwise permitted by
the Senior Indenture.
"Permitted Liens" means (i) Liens for taxes, assessments or
governmental charges or claims that either (a) are not yet delinquent or (b) are
being contested in good faith by appropriate proceedings and as to which
appropriate reserves have been established or other provisions have been made in
accordance with GAAP,
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(ii) statutory Liens of landlords and carriers', warehousemen's, mechanics',
suppliers', materialmen's, repairmen's or other Liens imposed by law and arising
in the ordinary course of business and with respect to amounts that, to the
extent applicable, either (a) are not yet delinquent or (b) are being contested
in good faith by appropriate proceedings and as to which appropriate reserves
have been established or other provisions have been made in accordance with
GAAP, (iii) Liens (other than any Lien imposed by the Employee Retirement Income
Security Act of 1974, as amended) incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, (iv) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory obligations,
surety and appeal bonds, progress payments, government contracts and other
obligations of like nature (exclusive of obligations for the payment of borrowed
money), in each case incurred in the ordinary course of business of the Company
and its Subsidiaries, (v) attachment or judgment Liens not giving rise to a
Default or an Event of Default and which are being contested in good faith by
appropriate proceedings, (vi) easements, rights-of-way, restrictions and other
similar charges or encumbrances not materially interfering with the ordinary
course of business of the Company and its Subsidiaries, (vii) zoning
restrictions, licenses, restrictions on the use of real property or minor
irregularities in title thereto, which do not materially impair the use of such
real property in the ordinary course of business of the Company and its
Subsidiaries or the value of such real property for the purpose of such
business, (viii) leases or subleases granted to others not materially
interfering with the ordinary course of business of the Company and its
Subsidiaries, (ix) purchase money mortgages (including, without limitation,
Capitalized Lease Obligations and purchase money security interests), (x) Liens
securing Refinancing Indebtedness; provided that such Liens only extend to
assets which are similar to the type of assets securing the Indebtedness being
refinanced and such refinanced Indebtedness was previously secured by such
similar assets, (xi) Liens securing Indebtedness of the Company and its
Restricted Subsidiaries; provided that the aggregate amount of Indebtedness
secured by Liens (other than Non-Recourse Indebtedness secured by Liens) will
not exceed 40 percent of Consolidated Tangible Net Assets, (xii) any interest in
or title of a lessor to property subject to any Capitalized Lease Obligations
incurred in compliance with the provisions of the Senior Indenture, (xiii) Liens
existing on the Issue Date, including, without limitation, Liens securing
Existing Indebtedness, (xiv) any option, contract or other agreement to sell an
asset; provided such sale is not otherwise prohibited under the Senior
Indenture, (xv) Liens securing Non-Recourse Indebtedness of the Company or a
Restricted Subsidiary thereof, (xvi) Liens on property or assets of any
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary owing
to the Company or one or more Restricted Subsidiaries, (xvii) Liens securing
Indebtedness of an Unrestricted Subsidiary, (xviii) any right of a lender or
lenders to which the Company or a Restricted Subsidiary may be indebted to
offset against, or appropriate and apply to the payment of, such Indebtedness
any and all balances, credits, deposits, accounts or monies of the Company or a
Restricted Subsidiary with or held by such lender or lenders and (xix) any
pledge or deposit of cash or property in conjunction with obtaining surety and
performance bonds and letters of credit required to engage in constructing
on-site and off-site improvements required by municipalities or other
governmental authorities in the ordinary course of business of the Company, by
the Company or any Restricted Subsidiary.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, incorporated or unincorporated association, joint
stock company, trust, unincorporated organization or government or other agency
or political subdivision thereof or other entity of any kind.
"Place of Payment", when used with respect to the Offered Senior Debt
Securities, means the place or places where the principal of and interest on the
Offered Senior Debt Securities are payable.
"Preferred Stock" of any Person means all Capital Stock of such Person
which has a preference in liquidation or with respect to the payment of
dividends.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances
or extends any Existing Indebtedness or other Indebtedness permitted to be
Incurred by the Company or its Restricted Subsidiaries pursuant to the terms of
the Senior Indenture, but only to the extent that (i) the Refinancing
Indebtedness is subordinated to the Offered Senior Debt Securities to the same
extent as the Indebtedness being refunded, refinanced or extended, if at all,
(ii) the Refinancing Indebtedness is scheduled to mature either (a) no earlier
than the Indebtedness being refunded, refinanced or extended, or (b) after the
maturity date of the Offered Senior Debt Securities, (iii) the portion, if any,
of the Refinancing Indebtedness that is scheduled to mature on or prior to the
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Maturity date of the Offered Senior Debt Securities has a Weighted Average Life
to Maturity at the time such Refinancing Indebtedness is Incurred that is equal
to or greater than the Weighted Average Life to Maturity of the portion of the
Indebtedness being refunded, refinanced or extended that is scheduled to mature
on or prior to the Maturity date of the Offered Senior Debt Securities, (iv)
such Refinancing Indebtedness is in an aggregate amount that is equal to or less
than the aggregate amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (v) such Refinancing Indebtedness is Incurred
by the same Person that initially Incurred the Indebtedness being refunded,
refinanced or extended, except that the Company may Incur Refinancing
Indebtedness to refund, refinance or extend Indebtedness of any Restricted
Subsidiary, and (vi) such Refinancing Indebtedness is Incurred within 180 days
before or after the Indebtedness being refunded, refinanced or extended is so
refunded, refinanced or extended; provided that Refinancing Indebtedness shall
include the amount of any Indebtedness under the Existing Credit Facility which
is Incurred within 180 days before or after the repayment of an equal amount of
Indebtedness under the Existing Credit Facility which was Incurred pursuant to
the provisions of the Senior Indenture described in the first paragraph under
the caption "-- Limitations on Additional Indebtedness."
"Registrar" has the meaning set forth in the "Registration,
Registration of Transfer and Exchange" section of the Senior Indenture.
"Restricted Investment" with respect to any Person means any Investment
(other than any Permitted Investment) by such Person in any (i) of its
Affiliates, (ii) executive officer or director of any Affiliate of such Person,
or (iii) other Person other than a Restricted Subsidiary which is a Wholly Owned
Subsidiary of the referent Person; provided, however, that with respect to the
Company and its Restricted Subsidiaries, any loan or advance to an executive
officer or director of the Company or a Subsidiary will not constitute a
Restricted Investment provided such loan or advance is made in the ordinary
course of business consistent with past practices, and, if such loan or advance
exceeds $100,000 (other than a readily marketable mortgage loan not exceeding
$500,000), such loan or advance has been approved by the Board of Directors of
the Company or a disinterested committee thereof.
"Restricted Payment" with respect to any Person means (i) the
declaration of any dividend or the making of any other payment or distribution
of cash, securities or other property or assets in respect of such Person's
Capital Stock (except that a dividend payable solely in Capital Stock (other
than Disqualified Stock) of such Person will not constitute a Restricted
Payment), (ii) any payment on account of the purchase, redemption, retirement or
other acquisition for value of such Person's Capital Stock or any other payment
or distribution made in respect thereof (other than payments or distributions
excluded from the definitions of Restricted Payment in clause (i) above), either
directly or indirectly, (iii) any Restricted Investment, and (iv) any principal
payment, redemption, repurchase, defeasance or other acquisition or retirement
of any Indebtedness of any Unrestricted Subsidiary or of Indebtedness of the
Company or its Restricted Subsidiaries which is subordinated in right of payment
to the Offered Senior Debt Securities (provided, however, that the payment,
redemption, repurchase, defeasance or other acquisition or retirement of any
such subordinated Indebtedness by the Company or any Restricted Subsidiary on
its scheduled final Maturity date or on any other scheduled date for the payment
of any installment of principal thereof (whether pursuant to a sinking fund,
mandatory redemption or otherwise) shall not be a Restricted Payment); provided,
further, that with respect to the Company and its Subsidiaries, Restricted
Payments will not include (a) any payment or other obligation described in
clause (i), (ii) or (iii) above made to, or on behalf of or for the benefit of,
the Company or any of its Restricted Subsidiaries which are Wholly Owned
Subsidiaries by any of the Company's Subsidiaries, or (b) any proportionate
payment in respect of minority interests in Restricted Subsidiaries of the
Company to the extent that the payment constitutes a return of capital that was
not included in the Company's shareholders' equity or a dividend or similar
distribution not included in determining the Company's Consolidated Net Income,
or (c) any principal payment, redemption, repurchase, defeasance or other
acquisition or retirement of Indebtedness of the Company or its Restricted
Subsidiaries which is subordinated to the Offered Senior Debt Securities if the
consideration therefor consists solely of, or is the proceeds from, Indebtedness
subordinated to the Offered Senior Debt Securities to the same extent as the
Indebtedness being paid, redeemed, repurchased, defeased or otherwise acquired
or retired, or (d) any principal payment, redemption, repurchase, defeasance or
other acquisition or retirement of Indebtedness or Capital Stock of such Person
or its Subsidiaries if the consideration therefor consists solely of Capital
Stock (other than
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Disqualified Stock) of such Person, or the proceeds from such sale of such
Capital Stock, or (e) any loans or advances by the Company or any Restricted
Subsidiary to Unrestricted Subsidiaries which in an aggregate amount at any one
time outstanding do not exceed $50,000,000, or (f) any principal payment,
redemption, repurchase, defeasance, or other acquisition or retirement of the
Debentures.
"Restricted Subsidiary" means each of the Subsidiaries of the Company
which is not an Unrestricted Subsidiary.
"Security Register" has the meaning set forth in the "Registration,
Registration of Transfer and Exchange" section of the Senior Indenture.
"Stated Maturity", when used with respect to any Offered Senior Debt
Security or any installment of principal thereof or interest thereon, means the
date specified in such Offered Senior Debt Security as the fixed date on which
the principal of such Offered Senior Debt Security or such installment of
principal or interest is due and payable.
"Subsidiary" of any Person means any (i) corporation of which at least
a majority of the aggregate voting power of all classes of the Common Equity is
directly or indirectly beneficially owned by such Person, and (ii) entity other
than a corporation of which such Person directly or indirectly beneficially owns
at least a majority of the Common Equity.
"Trustee" means the Person named as Trustee in the first paragraph of
the Senior Indenture until a successor Trustee shall have become such pursuant
to the applicable provisions of the Senior Indenture, and thereafter "Trustee"
shall mean or include each Person who is then a Trustee thereunder.
"Unrestricted Subsidiary" means each of the Subsidiaries of the Company
so designated by a Board Resolution. The Board of Directors of the Company may
designate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that (i) any such redesignation will be deemed to be an Incurrence by the
Company and its Restricted Subsidiaries of the Indebtedness (if any) of such
redesignated Subsidiary for purposes of the provisions of the Senior Indenture
described under the caption "--Limitations on Additional Indebtedness" as of the
date of such redesignation and (ii) immediately after giving effect to such
redesignation and the Incurrence of any such additional Indebtedness, the
Company and its Restricted Subsidiaries could Incur $1.00 of additional
Indebtedness under the Consolidated Fixed Charge Coverage Ratio. Subject to the
foregoing, the Board of Directors of the Company also may designate any
Restricted Subsidiary to be an Unrestricted Subsidiary; provided that (i) all
previous Investments by the Company and its Restricted Subsidiaries in such
Restricted Subsidiary will be deemed to be Restricted Payments at the time of
such designation and will reduce the amount available for Restricted Payments
under the provisions of the Senior Indenture described under the caption
"--Limitations on Restricted Payments" and (ii) immediately after giving effect
to such designation and reduction of amounts available for Restricted Payments
under such provisions, the Company and its Restricted Subsidiaries could Incur
$1.00 of additional Indebtedness under the Consolidated Fixed Charge Coverage
Ratio. Any such designation or redesignation by the Board of Directors of the
Company will be evidenced to the Trustee by the filing with the Trustee of a
Board Resolution giving effect to such designation or redesignation and an
Officers' Certificate certifying that such designation or redesignation complied
with the foregoing conditions and setting forth the underlying calculations of
such Officers' Certificate.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or portion thereof, at any date, the number of years obtained by
dividing (i) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payment of principal, including, without limitation, payment at final maturity,
in respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment
by (ii) the then outstanding principal amount of such Indebtedness or portion
thereof.
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"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary, of
which 100 percent of the Common Equity (except for directors' qualifying shares
or certain minority interests owned by other Persons solely due to local law
requirements that there be more than one stockholder, but which interest is not
in excess of what is required for such purpose) is owned directly by such Person
or through one or more other Wholly Owned Subsidiaries of such Person, or (ii)
any entity other than a corporation in which such Person, directly or
indirectly, owns all of the Common Equity of such entity.
SENIOR SUBORDINATED INDENTURE COVENANTS
In addition to the other covenants set forth in the Prospectus and
except as otherwise provided in a Prospectus Supplement relating to the Offered
Senior Subordinated Debt Securities, the Senior Subordinated Indenture will
include the following covenants:
Reports to Holders of Senior Subordinated Debt Securities. The Senior
Subordinated Indenture will provide that as long as more than 10 percent of the
original amount of the Offered Senior Subordinated Debt Securities is
outstanding, the Company will (i) remain subject to the requirements of Section
13 or 15(d) of the Exchange Act whether or not it is required to do so by the
provisions thereof and will file with the Commission all periodic reports as may
be required thereunder and (ii) file with the Commission, and with the Trustee
within 15 days after the Company is required to file the same with the
Commission, copies of the periodic reports which the Company may be required to
file with the Commission pursuant to Section 13(a), 13(c) or 15(d) of the
Exchange Act. The Company will also make such reports available to the Holders,
prospective purchasers of the Offered Senior Subordinated Debt Securities,
securities analysts and broker-dealers upon their written request.
The Senior Subordinated Indenture will also provide that in the event
that (i) 10 percent or less of the original principal amount of the Offered
Senior Subordinated Debt Securities are outstanding and (ii) the Company is not
required to file with the Commission such reports and other information referred
to in the preceding paragraph, the Company will furnish to the Trustee (A)
within 120 days after the end of each fiscal year, annual reports containing the
information required to be contained in Items 1, 2, 3, 5, 6, 7, 8 and 9 of the
Annual Report on Form 10-K promulgated under the Exchange Act, or substantially
the same information required to be contained in comparable items of any
successor form, (B) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year, quarterly reports containing the
information required to be contained in the Quarterly Report on Form 10-Q
promulgated under the Exchange Act, or substantially the same information
required to be contained in any successor form, and (C) promptly from the time
after the occurrence of an event which would be required to be reported in the
Current Report on Form 8-K if the Company was required to file such Report, such
other reports containing information required to be contained in the Current
Report on Form 8-K promulgated under the Exchange Act, or substantially the same
information required to be contained in any successor form.
The Senior Subordinated Indenture will also provide that the Company
will also comply with the other provisions of Section 314(a) of the TIA.
Limitations on Restricted Payments. The Senior Subordinated Indenture
will provide that the Company will not, and will not permit any of its
Restricted Subsidiaries to, make any Restricted Payment, directly or indirectly,
after the Issue Date if at the time of such Restricted Payment:
(i) the amount of such Restricted Payment (the amount of such
Restricted Payment, if other than in cash, will be determined by the
Board of Directors of the Company), when added to the aggregate amount
of all Restricted Payments made after the Issue Date, exceeds the sum
of: (1) $100,000,000, plus (2) 50 percent of the Company's Consolidated
Net Income accrued during the period (taken as a single period) since
January 1, 1997 (or, if such aggregate Consolidated Net Income is a
deficit, minus 100 percent of such aggregate deficit), plus (3) the net
cash proceeds derived from the issuance and sale of Capital Stock of
the Company and its Restricted Subsidiaries that is not Disqualified
Stock (other than a sale to a Subsidiary of the Company) after the
Issue Date but only to the extent not applied under clause (c) of the
definition of "Restricted Payment" set forth herein, plus (4) 100
percent of the principal amount
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of any Indebtedness of the Company or a Restricted Subsidiary that is
converted into or exchanged for Capital Stock of the Company that is
not Disqualified Stock, plus (5) 100 percent of the aggregate amounts
received by the Company or any Restricted Subsidiary upon the sale,
disposition or liquidation (including by way of dividends) of any
Investment but only to the extent (x) not included in Consolidated Net
Income in clause (i)(2) above and (y) that the making of such
Investment constituted a Restricted Investment made pursuant to the
provisions of the Senior Subordinated Indenture described in this
paragraph, plus (6) 100 percent of the principal amount of, or if
issued at a discount the accreted value of, any Indebtedness or other
obligation that is the subject of a guaranty by the Company which is
released after the Issue Date, but only to the extent that the granting
of such guaranty constituted a "Restricted Payment" under the
definition thereof set forth in the Senior Subordinated Indenture and
described herein; or
(ii) the Company would be unable to incur an additional $1.00
of Indebtedness under the ratio of the Company's Indebtedness
(excluding Non-Recourse Indebtedness) to Consolidated Tangible Net
Worth set forth under the caption "--Limitations on Additional
Indebtedness"; or
(iii) a Default or Event of Default has occurred and is
continuing or occurs as a consequence thereof.
Notwithstanding the foregoing, the provisions of the Senior
Subordinated Indenture described above will not prevent: (i) the payment of any
dividend within 60 days after the date of declaration thereof if the payment
thereof would have complied with the limitations of the Senior Subordinated
Indenture on the date of declaration or (ii) the retirement of shares of the
Company's Capital Stock or the Company's or a Subsidiary of the Company's
Indebtedness for, in exchange for or out of the proceeds of a substantially
concurrent sale (other than a sale to a Subsidiary of the Company) of, other
shares of its Capital Stock (other than Disqualified Stock).
Limitations on Additional Indebtedness. The Senior Subordinated
Indenture will provide that the Company will not, and will not permit any of its
Restricted Subsidiaries to, Incur any additional Indebtedness (other than
Indebtedness between the Company and its Restricted Subsidiaries which are
Wholly Owned Subsidiaries or among such Restricted Subsidiaries which are Wholly
Owned Subsidiaries), including Acquisition Debt, unless, after giving effect
thereto or the application of the proceeds therefrom, the ratio of the Company's
Indebtedness (excluding, for purposes of this calculation, Non-Recourse
Indebtedness) to Consolidated Tangible Net Worth on the date thereof is not
greater than 3.0 to 1.0.
Notwithstanding the foregoing, the provisions of the Senior
Subordinated Indenture will not prevent: (i) in addition to the Indebtedness
permitted to be Incurred under clauses (ii), (iii) and (iv) of this sentence and
Indebtedness permitted to be Incurred under the provisions of the Senior
Subordinated Indenture described in the preceding paragraph, the Company and/or
any Restricted Subsidiary from Incurring (A) Refinancing Indebtedness, (B)
Non-Recourse Indebtedness, and (C) Indebtedness Incurred for working capital
purposes or to finance the acquisition, holding or development of property by
the Company and its Restricted Subsidiaries (including, without limitation, the
financing of any related interest reserve) in the ordinary course of business in
an aggregate amount at any one time outstanding not to exceed $50,000,000
(excluding any Indebtedness referred to in clauses (i)(A), (i)(B), (ii), (iii)
and (iv) of this paragraph), (ii) Unrestricted Subsidiaries from Incurring
Indebtedness, (iii) the Company and its Restricted Subsidiaries from Incurring
Indebtedness under any deposits made to secure performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, progress statements,
government contracts and other obligations of like nature (exclusive of the
obligation for the payment of borrowed money), in each case Incurred in the
ordinary course of business of the Company or any Restricted Subsidiary
consistent with past practice and (iv) Restricted Subsidiaries from guaranteeing
Indebtedness of the Company or another Restricted Subsidiary.
Change of Control. The Senior Subordinated Indenture will provide that,
following the occurrence of any Change of Control, the Company will so notify
the Trustee in writing by delivery of an Officers' Certificate and will offer to
purchase (a "Change of Control Offer") from all Holders, and will purchase from
Holders accepting such Change of Control Offer on the date fixed for the closing
of such Change of Control Offer (the "Change of
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Control Payment Date"), the Outstanding Offered Senior Subordinated Debt
Securities at an offer price (the "Change of Control Price") in cash in an
amount equal to 101 percent of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the Change of Control Payment Date in
accordance with the procedures set forth in the "Change of Control" covenant of
the Senior Subordinated Indenture.
In addition, the Senior Subordinated Indenture will provide that,
within 30 days after the date of any Change of Control, the Company (with
written notice to the Trustee) or the Trustee at the Company's request (and at
the expense of the Company), will send or cause to be sent by first-class mail,
postage prepaid, to all Holders on the date of the Change of Control at their
respective addresses appearing in the Security Register, a notice, prepared by
the Company advising such Holders of such occurrence and of such Holder's rights
arising as a result thereof. Such notice will contain all instructions and
materials necessary to enable such Holders to tender their Offered Senior
Subordinated Debt Securities to the Company.
The Senior Subordinated Indenture will also provide that:
(a) In the event of a Change of Control Offer, the Company
will only be required to accept Offered Senior Subordinated Debt
Securities in denominations of $1,000 or integral multiples thereof.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than any restriction set forth in any agreement,
indenture, document or instrument relating to any Existing Indebtedness
or Refinancing Indebtedness with respect thereto) that would materially
impair the ability of the Company to make a Change of Control Offer.
Notwithstanding the foregoing, if a Change of Control Offer is made,
the Company will pay for Offered Senior Subordinated Debt Securities
tendered for purchase in accordance with the provisions of the Senior
Subordinated Indenture described under the caption "--Change of
Control."
(c) Not later than one Business Day prior to the Change of
Control Payment Date in connection with which the Change of Control
Offer is being made, the Company will (i) accept for payment Offered
Senior Subordinated Debt Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent money sufficient, in immediately available funds, to pay the
purchase price of all Offered Senior Subordinated Debt Securities or
portions thereof so accepted and (iii) deliver to the Paying Agent an
Officers' Certificate identifying the Offered Senior Subordinated Debt
Securities or portions thereof accepted for payment by the Company. The
Paying Agent will promptly authenticate and mail or deliver to Holders
of Offered Senior Subordinated Debt Securities so accepted payment in
an amount equal to the Change of Control Price of the Offered Senior
Subordinated Debt Securities purchased from each such Holder, and the
Company will execute and, upon receipt of an Officers' Certificate of
the Company, the Trustee will promptly authenticate and mail or deliver
to such Holder a new Offered Senior Subordinated Debt Security equal in
principal amount to any unpurchased portion of the Offered Senior
Subordinated Debt Security surrendered. Any Offered Senior Subordinated
Debt Securities not so accepted will be promptly mailed or delivered by
the Paying Agent at the Company's expense to the Holder thereof. The
Company will publicly announce the results of the Change of Control
Offer on the Change of Control Payment Date. For purposes of the
provisions of the Senior Subordinated Indenture described above, the
Company will choose a Paying Agent which will not be the Company or a
Subsidiary thereof. Any excess cash held by the Trustee after the
expiration of the Change of Control Offer will be returned to the
Company.
(d) Any Change of Control Offer will be conducted by the
Company in compliance with applicable law, including, without
limitation, Section 14(e) of the Exchange Act and Rule 14e-1
thereunder, if applicable.
There can be no assurance that sufficient funds will be available at
the time of a Change of Control to make any required repurchases. The Company's
failure to make any required repurchases in the event of a Change of Control
Offer will create an Event of Default under the Senior Subordinated Indenture.
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For example, the Indentures for the 1993 Senior Notes and the 1996
Senior Notes contain similar covenants limiting the amount of "restricted
payments" made by the Company, including the acquisition of subordinated debt.
The amount of restricted payments permitted to be made by the Company will vary
depending upon, among other things, the Company's cumulative earnings and
restricted payments made other than acquisitions of subordinated debt (e.g.,
repurchases of stock by the Company). The Company's principal credit facility
generally prohibits the Company from acquiring subordinated debt, except for a
limited dollar basket or using the proceeds of new subordinated debt or equity
securities.
No quantitative or other established meaning has been given to the
phrase "all or substantially all" (which appears in the definition of Change of
Control) by courts which have interpreted this phrase in various contexts. In
interpreting this phrase, courts make a subjective determination as to the
portion of assets conveyed, considering such factors as the value of the assets
conveyed and the proportion of an entity's income derived from the assets
conveyed. Accordingly, there may be uncertainty as to whether a Holder of
Offered Senior Subordinated Debt Securities can determine whether a Change of
Control has occurred and exercise any remedies such Holder may have upon a
Change of Control.
Limitations on Transactions with Affiliates. The Senior Subordinated
Indenture will provide that the Company will not, and will not permit any of its
Restricted Subsidiaries to, make any loan, advance, guaranty or capital
contribution to or for the benefit of, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or for the benefit of, or
purchase or lease any property or assets from, or enter into or amend any
contract, agreement or understanding with, or for the benefit of, (i) any
Affiliate of the Company or any Affiliate of the Company's Restricted
Subsidiaries or (ii) any Person (or any Affiliate of such Person) holding 10
percent or more of the Common Equity of the Company or any of its Restricted
Subsidiaries (each an "Affiliate Transaction"), except on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary, as the case may
be, than those that could have been obtained in a comparable transaction on an
arms' length basis from a Person that is not an Affiliate.
The Senior Subordinated Indenture will also provide that the Company
will not, and will not permit any of its Restricted Subsidiaries to, enter into
an Affiliate Transaction involving or having a value of more than $10,000,000,
unless in each case such Affiliate Transaction has been approved by a majority
of the disinterested members of the Company's Board of Directors.
The Senior Subordinated Indenture will also provide that the Company
will not, and will not permit any of its Restricted Subsidiaries to, enter into
any Affiliate Transaction involving or having a value of more than $20,000,000
unless the Company has delivered to the Trustee an opinion of an Independent
Financial Advisor to the effect that the transaction is fair to the Company or
the relevant Restricted Subsidiary, as the case may be, from a financial point
of view.
The Senior Subordinated Indenture will also provide that,
notwithstanding the foregoing, an Affiliate Transaction will not include (i) any
contract, agreement or understanding with, or for the benefit of, or plan for
the benefit of, employees or directors of the Company or its Subsidiaries (in
their capacity as such) that has been approved by the Company's Board of
Directors, (ii) Capital Stock issuances to members of the Board of Directors,
officers or employees of the Company or its Subsidiaries pursuant to plans
approved by the stockholders of the Company, (iii) any Restricted Payment
otherwise permitted under the provisions of the Senior Subordinated Indenture
described under the caption "--Limitations on Restricted Payments", (iv) any
transaction between the Company or a Restricted Subsidiary and another
Restricted Subsidiary, (v) any contract, agreement or understanding as in effect
on the Issue Date or any amendment thereto or any transaction contemplated
thereby (including any amendment thereto) or (vi) loans or advances by the
Company or any Restricted Subsidiary to Unrestricted Subsidiaries which in an
aggregate amount at any one time outstanding do not exceed $50,000,000.
Limitations on Restrictions on Distributions from Restricted
Subsidiaries. The Senior Subordinated Indenture will provide that the Company
will not, and will not permit any of its Restricted Subsidiaries to, create,
assume or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction (other than encumbrances or restrictions imposed by
law or by judicial or regulatory action or by provisions in leases or other
agreements that restrict the assignability thereof) on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or any other interest or participation in, or measured by, its
profits, owned by the Company or any of its other Restricted Subsidiaries, or
pay interest on or principal of any Indebtedness owed to the Company or any of
its other Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its other Restricted Subsidiaries, or (iii) transfer any of its
properties or assets to the Company or any of its other Restricted Subsidiaries,
except for encumbrances or restrictions existing under or by reason of (a)
applicable law, (b) covenants or restrictions contained in Existing Indebtedness
as in effect on the Issue Date, (c) any restrictions or encumbrances arising in
connection with the Existing Credit Facility; provided
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that any such restrictions and encumbrances relating to any extension or renewal
of the Existing Credit Facility are not more restrictive than those in the
Existing Credit Facility being extended or renewed, (d) any restrictions or
encumbrances arising in connection with Refinancing Indebtedness; provided that
any restrictions and encumbrances of the type described in this clause (d) that
arise under such Refinancing Indebtedness are not more restrictive than those
under the agreement creating or evidencing the Indebtedness being refunded or
refinanced, (e) any agreement restricting the sale or other disposition of
property securing Indebtedness permitted by the Senior Subordinated Indenture if
such agreement does not expressly restrict the ability of a Subsidiary of the
Company to pay dividends or make loans or advances, (f) reasonable and customary
borrowing base covenants set forth in credit agreements evidencing Indebtedness
otherwise permitted by the Senior Subordinated Indenture which covenants
restrict or limit the distribution of revenues or sale proceeds from real estate
or a real estate project based upon the amount of Indebtedness outstanding on
such real estate or real estate project and the value of some or all of the
remaining real estate or the project's remaining assets and (g) any restrictions
under any instrument creating or evidencing any Acquisition Debt that was
permitted to be Incurred pursuant to the Senior Subordinated Indenture and the
Offered Senior Subordinated Debt Securities and which (1) only apply to assets
that were subject to such restrictions and encumbrances prior to the acquisition
of such assets by the Company or any of its Restricted Subsidiaries and (2) were
not created in connection with, or in contemplation of, such acquisition, and
any restrictions replacing those permitted by this clause (g) which are not more
restrictive than, and do not extend to any Persons or assets other than the
Persons or assets subject to, the restrictions and encumbrances so replaced.
Maintenance of Consolidated Tangible Net Worth. The Senior Subordinated
Indenture will provide that in the event that the Consolidated Tangible Net
Worth of the Company for any two consecutive fiscal quarters is less than
$115,000,000, within 30 days after the end of each such period the Company will
so notify the Trustee in writing by delivery of an Officers' Certificate and
will offer to purchase from all Holders (a "Net Worth Offer"), and will purchase
from Holders accepting such Net Worth Offer on the date fixed for the closing of
such Net Worth Offer (the "Net Worth Offer Date"), ten percent of the original
Outstanding principal amount of the Offered Senior Subordinated Debt Securities
(the "Net Worth Amount") at an offer price (the "Net Worth Offer Price") in cash
in an amount equal to 100 percent of the principal amount thereof plus accrued
and unpaid interest, if any, to the Net Worth Offer Date, in accordance with the
procedures set forth in the "Maintenance of Consolidated Tangible Net Worth"
covenant of the Senior Subordinated Indenture. To the extent that the aggregate
amount of Offered Senior Subordinated Debt Securities tendered pursuant to a Net
Worth Offer is less than the Net Worth Amount relating thereto, then the Company
may use the excess of the Net Worth Amount over the amount of Offered Senior
Subordinated Debt Securities tendered, or a portion thereof, for general
corporate purposes.
The Senior Subordinated Indenture will also provide that in the event
that the Consolidated Tangible Net Worth of the Company for any two consecutive
fiscal quarters is less than $115,000,000, within 30 days after the end of such
period, the Company (with written notice to the Trustee) or the Trustee at the
Company's request (and at the expense of the Company) will send or cause to be
sent by first-class mail, postage prepaid, to all Holders on the date of the end
of the second such consecutive fiscal quarter, at their respective addresses
appearing in the Security Register, a notice, prepared by the Company advising
such Holders of such occurrence and of each Holder's rights arising as a result
thereof. Such notice will contain all instructions and materials necessary to
enable Holders to tender their Offered Senior Subordinated Debt Securities to
the Company.
The Senior Subordinated Indenture will also provide that:
(a) In the event that the aggregate principal amount of
Offered Senior Subordinated Debt Securities surrendered by Holders
exceeds the Net Worth Amount, the Company will select the Offered
Senior Subordinated Debt Securities to be purchased on a pro rata basis
from all Offered Senior Subordinated Debt Securities so surrendered,
with such adjustments as may be deemed appropriate by the Company so
that only Offered Senior Subordinated Debt Securities in denominations
of $1,000, or integral multiples thereof, will be purchased. To the
extent that the Net Worth Amount remaining is less than $1,000, the
Company may use such Net Worth Amount for general corporate purposes.
Holders whose Offered Senior Subordinated Debt Securities are purchased
only in part will be issued new Offered
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Senior Subordinated Debt Securities equal in principal amount to the
unpurchased portion of the Offered Senior Subordinated Debt Securities
surrendered.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or permit to exist or become effective any
restriction (other than any restriction set forth in any agreement,
indenture, document or instrument relating to any Existing Indebtedness
or Refinancing Indebtedness with respect thereto) that would materially
impair the ability of the Company to make a Net Worth Offer.
Notwithstanding the foregoing, if a Net Worth Offer is made, the
Company will pay for Offered Senior Subordinated Debt Securities
tendered for purchase in accordance with the provisions of the Senior
Subordinated Indenture described under the caption "--Maintenance of
Consolidated Tangible Net Worth."
(c) Not later than one Business Day prior to the Net Worth
Offer Date in connection with which the Net Worth Offer is being made,
the Company will (i) accept for payment Offered Senior Subordinated
Debt Securities or portions thereof tendered pursuant to the Net Worth
Offer (on a pro rata basis if required pursuant to the provisions of
the Senior Subordinated Indenture described in paragraph (a) above),
(ii) deposit with the Paying Agent money sufficient, in immediately
available funds, to pay the purchase price of all Offered Senior
Subordinated Debt Securities or portions thereof so accepted and (iii)
deliver to the Paying Agent an Officers' Certificate identifying the
Offered Senior Subordinated Debt Securities or portions thereof
accepted for payment by the Company. The Paying Agent will promptly
after acceptance mail or deliver to Holders of Offered Senior
Subordinated Debt Securities so accepted payment in an amount equal to
the Net Worth Offer Price of the Offered Senior Subordinated Debt
Securities purchased from each such Holder, and the Company will
execute and the Trustee will promptly authenticate and mail or deliver
to such Holder a new Offered Senior Subordinated Debt Security equal in
principal amount to any unpurchased portion of the Offered Senior
Subordinated Debt Security surrendered. Any Offered Senior Subordinated
Debt Securities not so accepted will be promptly mailed or delivered by
the Paying Agent at the Company's expense to the Holder thereof. The
Company will publicly announce the results of the Net Worth Offer on
the Net Worth Offer Date. For purposes of the provisions of the Senior
Subordinated Indenture described above, the Company will choose a
Paying Agent which will not be the Company or a Subsidiary thereof. Any
excess cash held by the Trustee after the expiration of the Net Worth
Offer will be returned to the Company.
(d) Any Net Worth Offer will be conducted by the Company in
compliance with applicable law, including, without limitation, Section
14(e) of the Exchange Act and Rule 14e-1 thereunder, if applicable.
For example, the Indentures for the 1993 Senior Notes and the 1996
Senior Notes contain similar covenants limiting the amount of "restricted
payments" made by the Company, including the acquisition of subordinated debt.
The amount of restricted payments permitted to be made by the Company will vary
depending upon, among other things, the Company's cumulative earnings and
restricted payments made other than acquisitions of subordinated debt (e.g.,
repurchases of stock by the Company). The Company's principal credit facility
generally prohibits the Company from acquiring subordinated debt, except for a
limited dollar basket or using the proceeds of new subordinated debt or equity
securities.
There can be no assurance that sufficient funds will be available at
the time of a Net Worth Offer to make any required repurchases. The Company's
failure to make any required repurchases in the event of a Net Worth Offer will
create an Event of Default under the Senior Subordinated Indenture.
Limitations on Mergers and Consolidations. The Senior Subordinated
Indenture will provide that the Company will not consolidate or merge with or
into, or sell, lease, convey or otherwise dispose of all or substantially all of
its assets (including, without limitation, by way of liquidation or
dissolution), or assign any of its obligations thereunder or under the Offered
Senior Subordinated Debt Securities (as an entirety or substantially an entirety
in one transaction or series of related transactions), to any Person unless: (i)
the Person formed by or surviving such consolidation or merger (if other than
the Company), or to which sale, lease, conveyance or other disposition or
assignment will be made (collectively, the "Successor"), is a solvent
corporation or other legal entity organized and existing under the laws of the
United States or any state thereof or the District of Columbia, and the
Successor assumes by supplemental indenture in a form reasonably satisfactory to
the Trustee all of the obligations of the Company under the Offered Senior
Subordinated Debt Securities and the Senior Subordinated Indenture, (ii)
immediately after giving effect to such transaction, no Default or Event of
Default has occurred and is continuing, (iii) immediately after giving effect to
such transaction and the use of any net proceeds therefrom on a pro forma basis,
the Consolidated Tangible Net Worth of the Company or the Successor, as the case
may be, would be at least equal to the Consolidated Tangible Net Worth of the
Company immediately prior to such
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transaction and (iv) the ratio of the Company's Indebtedness (excluding
Non-Recourse Indebtedness) to Consolidated Tangible Net Worth set forth in the
Senior Subordinated Indenture and described under the caption "--Limitations on
Additional Indebtedness" of the Company or the Successor, as the case may be,
immediately after giving effect to such transaction, would be such that the
Company or the Successor, as the case may be, would be entitled to Incur at
least $1 of additional Indebtedness under such ratio. However, any such
consolidation, merger, sale, lease, conveyance or disposition may result in a
Change of Control, thereby requiring the Company to make a Change of Control
Offer. See "-- Change of Control."
No quantitative or other established meaning has been given to the
phrase "all or substantially all" by courts which have interpreted this phrase
in various contexts. In interpreting this phrase, courts make a subjective
determination as to the portion of assets conveyed, considering such factors as
the value of the assets conveyed and the proportion of an entity's income
derived from the assets conveyed. Accordingly, there may be uncertainty as to
whether a Holder of Offered Senior Subordinated Debt Securities can determine
whether the Company has sold, leased, conveyed or otherwise disposed of all or
substantially all of its assets and exercise any remedies such Holder may have
upon the occurrence of any such transaction.
For purposes solely of this "Senior Subordinated Indenture Covenants"
section of this Prospectus, the terms set forth below shall have the following
meanings:
"Acquisition Debt" means Indebtedness of any Person existing at the
time such Person became a Subsidiary of the Company (or such Person is merged
into the Company or one of the Company's Subsidiaries) or assumed in connection
with the acquisition of assets from any such Person (other than assets acquired
in the ordinary course of business of the Company and its Subsidiaries),
including, without limitation, Indebtedness Incurred in connection with, or in
contemplation of, such Person becoming a Subsidiary of the Company (but
excluding Indebtedness of such Person which is extinguished, retired or repaid
in connection with such Person becoming a Subsidiary of the Company).
"Affiliate" of any Person means any Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
such Person. For purposes of the Senior Subordinated Indenture, each executive
officer and director of the Company and each Restricted Subsidiary will be an
Affiliate of the Company. In addition, for purposes of the Senior Subordinated
Indenture, control of a Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise. Notwithstanding the foregoing,
the term "Affiliate" will not include, with respect to the Company or any
Restricted Subsidiary which is a Wholly Owned Subsidiary of the Company, any
Restricted Subsidiary which is a Wholly Owned Subsidiary of the Company.
"Board of Directors" means the board of directors of a Person or any
authorized committee of the board of directors of such Person.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" of any Person means any and all shares, rights to
purchase, warrants or options (whether or not currently exercisable),
participations, or other equivalents of or interests in (however designated) the
equity (which includes, but is not limited to, common stock, preferred stock and
partnership and joint venture interests) of such Person (excluding any debt
securities that are convertible into, or exchangeable for, such equity).
"Capitalized Lease Obligations" of any Person means any obligation of
such Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligation will be the capitalized amount thereof determined in
accordance with GAAP.
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"Change of Control" means any of the following: (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or group of
Persons (within the meaning of Section 13(d)(3) of the Exchange Act) in one or a
series of transactions; provided that a transaction where the holders of all
classes of Common Equity of the Company immediately prior to such transaction
own, directly or indirectly, 50 percent or more of the aggregate voting power of
all classes of Common Equity of such Person or group immediately after such
transaction will not be a Change of Control, (ii) the acquisition by the Company
and/or any of its Subsidiaries of 50 percent or more of the aggregate voting
power of all classes of Common Equity of the Company in one transaction or a
series of related transactions, (iii) the liquidation or dissolution of the
Company; provided that a liquidation or dissolution of the Company which is part
of a transaction or series of related transactions that does not constitute a
Change of Control under the "provided" clause of clause (i) above will not
constitute a Change of Control under this clause (iii) or (iv) any transaction
or a series of related transactions (as a result of a tender offer, merger,
consolidation or otherwise) that results in, or that is in connection with, (a)
any Person, including, a "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) acquiring beneficial ownership (as determined in accordance with
Rule 13d-3 under the Exchange Act), directly or indirectly, of 50 percent or
more of the aggregate voting power of all classes of Common Equity of the
Company or of any Person that possesses beneficial ownership (as determined in
accordance with Rule 13d- 3 under the Exchange Act), directly or indirectly, of
50 percent or more of the aggregate voting power of all classes of Common Equity
of the Company or (b) less than 50 percent (measured by the aggregate voting
power of all classes) of the Common Equity of the Company being registered under
Section 12(b) or 12(g) of the Exchange Act.
"Common Equity" of any Person means all Capital Stock of such Person
that is generally entitled (i) to vote in the election of directors of such
Person, or (ii) if such Person is not a corporation, to vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management and policies of such Person.
"Consolidated Net Income" of the Company for any period means the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period, determined on a consolidated basis in accordance with GAAP;
provided that there will be excluded from such net income (to the extent
otherwise included therein), without duplication: (i) the net income (or loss)
of any Person (other than a Restricted Subsidiary) in which any Person
(including, without limitation, an Unrestricted Subsidiary) other than the
Company has an ownership interest, except to the extent that any such income has
actually been received by the Company or any Restricted Subsidiary in the form
of dividends or similar distributions during such period, (ii) except to the
extent includable in the Consolidated Net Income pursuant to the foregoing
clause (i), the net income (or loss) of any Person that accrued prior to the
date that (a) such Person becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or any of its Restricted Subsidiaries or (b) the
assets of such Person are acquired by the Company or any of its Restricted
Subsidiaries, (iii) the net income of any Restricted Subsidiary to the extent
that (but only so long as) the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of that income is not permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary during such period, (iv) in the case of a successor to the
Company by consolidation, merger or transfer of its assets, any earnings of the
successor prior to such merger, consolidation or transfer of assets and (v) the
gains (but not losses) resulting from (a) the acquisition of securities issued
by the Company or extinguishment of Indebtedness of the Company, (b) the sale or
other disposition (including, without limitation, dispositions pursuant to sale
and leaseback transactions) of any asset of the Company which is not sold or
disposed of in the ordinary course of business and (c) other extraordinary
items. Notwithstanding the foregoing, in calculating Consolidated Net Income,
the Company will be entitled to take into consideration the tax benefits
associated with any extraordinary loss, but only to the extent such tax benefits
are recognized by the Company. Consolidated Net Income will exclude any noncash
losses, whether or not extraordinary, incurred in connection with the issuance
of Capital Stock (other than Disqualified Stock) in exchange for Indebtedness of
the Company or its Wholly Owned Restricted Subsidiaries.
"Consolidated Tangible Net Worth" of the Company as of any date means
the stockholders' equity (including any Preferred Stock that is classified as
equity under GAAP, other than Disqualified Stock) of the Company and its
Restricted Subsidiaries on a consolidated basis at the end of the fiscal quarter
immediately
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<PAGE> 40
preceding such date, as determined in accordance with GAAP, less the amount of
Intangible Assets reflected on the consolidated balance sheet of the Company and
its Restricted Subsidiaries as of the end of the fiscal quarter immediately
preceding such date.
"Default" means any event, act or condition that is, or after notice or
the passage of time or both would be, an Event of Default.
"Defeasance" has the meaning set forth in Section 11.02 of the Senior
Subordinated Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
final Maturity date of the Offered Senior Subordinated Debt Securities; provided
that any Capital Stock which would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require the Company to
repurchase or redeem such Capital Stock upon the occurrence of a change of
control occurring prior to the final Maturity of the Offered Senior Subordinated
Debt Securities will not constitute Disqualified Stock if the change of control
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions of the Senior Subordinated Indenture
described under the caption "Change of Control" and such Capital Stock
specifically provides that the Company will not repurchase or redeem (or be
required to repurchase or redeem) any such Capital Stock pursuant to such
provisions prior to the Company's repurchase of Offered Senior Subordinated Debt
Securities pursuant to the "Change of Control" covenant set forth in the Senior
Subordinated Indenture.
"Event of Default" has the meaning set forth under the caption "--
Events of Default."
"Existing Credit Facility" means the Amended and Restated Credit
Agreement, dated as of May 28, 1997, between the Company and the lenders named
therein and The First National Bank of Chicago, as Agent (together with the
documents related thereto (including, without limitation, any guaranty
agreements)), as such Facility may be amended, restated, supplemented or
otherwise modified from time to time, and includes any facility extending the
maturity of, increasing the total commitment of, or restructuring (including,
without limitation, the inclusion of additional borrowers thereunder that are
Subsidiaries of the Company and whose obligations thereunder are guaranteed by
the Company) all or any portion of, the Indebtedness under such Facility or any
successor or replacement facilities and includes any facility with one or more
agents or lenders refinancing or replacing all or any portion of the
Indebtedness under such Facility or any successor facilities.
"Existing Indebtedness" means all of the Indebtedness of the Company
and its Subsidiaries that is outstanding on the Issue Date.
"Fair Market Value" with respect to any asset or property means the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on the Issue Date.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any interest rate swap agreement, foreign currency exchange
agreement, interest rate collar agreement, option or futures contract or other
similar agreement or arrangement relating to interest rates or foreign exchange
rates.
"Holder" means a Person in whose name an Offered Senior Subordinated
Debt Security is registered.
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"Incur" means to, directly or indirectly, create, incur, assume,
guaranty, extend the maturity of, or otherwise become liable with respect to any
Indebtedness.
"Indebtedness" of any Person at any date means, without duplication,
(i) all indebtedness of such Person for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (or
reimbursement obligations with respect thereto), other than standby letters of
credit issued for the benefit of, or surety and performance bonds issued by,
such Person in the ordinary course of business, (iv) all obligations of such
Person with respect to Hedging Obligations (other than those that fix or cap the
interest rate on variable rate indebtedness otherwise permitted by the Senior
Subordinated Indenture or that fix the exchange rate in connection with
indebtedness denominated in a foreign currency and otherwise permitted by the
Senior Subordinated Indenture and other than the purchase of mortgage
commitments in the ordinary course of business), (v) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
including, without limitation, all conditional sale obligations of such Person
and all obligations under any title retention agreement (except trade payables
and accrued expenses incurred in the ordinary course of business), (vi) all
Capitalized Lease Obligations of such Person, (vii) all indebtedness of others
secured by a Lien on any asset of such Person, whether or not such indebtedness
is assumed by such Person, (viii) all indebtedness of others guaranteed by, or
otherwise the liability of, such Person to the extent of such guaranty or
liability, and (ix) all Disqualified Stock issued by such Person (the amount of
indebtedness represented by any Disqualified Stock will equal the greater of the
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends). The amount of indebtedness of any Person at any date will be (a) the
outstanding balance at such date of all unconditional obligations as described
above, (b) the maximum liability of such Person for any contingent obligations
under clause (v) above and (c) in the case of clause (vii) (if the indebtedness
referred to therein is not assumed by such Person), the lesser of the (A) Fair
Market Value of all assets subject to a Lien securing the indebtedness of others
on the date that the Lien attaches and (B) amount of the indebtedness secured.
"Independent Financial Advisor" means an accounting, appraisal or
investment banking firm of nationally recognized standing that is, in the
reasonable judgment of the Company's Board of Directors, (i) qualified to
perform the task for which it has been engaged, and (ii) disinterested and
independent with respect to the Company, all of its Subsidiaries, and each
Affiliate of the Company and/or its Subsidiaries that is involved in the
Affiliate Transaction with respect to which such firm has been engaged.
"Intangible Assets" of the Company means all unamortized debt discount
and expense, unamortized deferred charges, goodwill, patents, trademarks,
service marks, trade names, copyrights, write-ups of assets over their carrying
value at the end of the last fiscal quarter ended prior to the Issue Date or the
date of acquisition, if acquired subsequent thereto, and all other items which
would be treated as intangibles on the consolidated balance sheet of the Company
and its Restricted Subsidiaries prepared in accordance with GAAP.
"Investments" of any Person means all (i) investments by such Person in
any other Person in the form of loans, advances or capital contributions, (ii)
guarantees of Indebtedness or other obligations of any other Person by such
Person, (iii) purchases (or other acquisitions for consideration) by such Person
of Indebtedness, Capital Stock or other securities of any other Person and (iv)
other items that would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet of such Person determined in accordance with GAAP.
"Issue Date" means the date of original issuance of the Offered Senior
Subordinated Debt Securities.
"Legal Holiday" means Saturday, Sunday or a day on which banking
institutions in New York, New York or at a Place of Payment are authorized or
obligated by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a Place of Payment, payment shall be made at that
place on the next succeeding day that is not a Legal Holiday and no interest
shall accrue for the intervening period.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance of any kind upon or in
respect of such asset, whether or not filed, recorded or otherwise perfected
under applicable law (including, without limitation, any conditional sale or
other title retention agreement, and any lease in the nature thereof, any option
or other agreement to sell, and any filing of, or agreement to give, any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Maturity", when used with respect to an Offered Senior Subordinated
Debt Security, means the date on which the principal of such Offered Senior
Subordinated Debt Security or an installment of principal becomes due and
payable as therein provided or provided in the Senior Subordinated Indenture,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise.
"Non-Recourse Indebtedness" means Indebtedness of the Company or a
Restricted Subsidiary for which (i) the sole legal recourse for collection of
principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was Incurred within 90 days after the acquisition of such property
and (ii) no other assets of the Company or such Restricted Subsidiary may be
realized upon in collection of principal or interest on such Indebtedness.
"Officer" means the Chairman of the Board, the President, the Senior
Vice President, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary, any Assistant Secretary or any Vice President of a Person.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the Person's Chief Executive Officer (or Co-Chief Executive
Officer), Chief Operating Officer, Chief Financial Officer or Chief Accounting
Officer.
"Outstanding", when used with respect to Offered Senior Subordinated
Debt Securities, means, as of the date of determination, all Offered Senior
Subordinated Debt Securities theretofore authenticated and delivered under the
Senior Subordinated Indenture, except:
(i) Offered Senior Subordinated Debt Securities theretofore
canceled by the Trustee or delivered to the Trustee for cancellation;
(ii) Offered Senior Subordinated Debt Securities for whose
payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the
Holders of such Offered Senior Subordinated Debt Securities; provided
that, if such Offered Senior Subordinated Debt Securities are to be
redeemed, notice of such redemption has been duly given pursuant to the
Senior Subordinated Indenture or provision therefor satisfactory to the
Trustee has been made;
(iii) Offered Senior Subordinated Debt Securities as to which
the Defeasance has been effected pursuant to the defeasance provisions,
if any, of the Senior Subordinated Indenture; and
(iv) Offered Senior Subordinated Debt Securities which have
been paid pursuant to the "Mutilated, Destroyed, Lost and Stolen
Securities" section of the Senior Subordinated Indenture or in exchange
for or in lieu of which other Offered Senior Subordinated Debt
Securities have been authenticated and delivered pursuant to the Senior
Subordinated Indenture, other than any such Offered Senior Subordinated
Debt Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Offered Senior
Subordinated Debt Securities are held by a bona fide purchaser in whose
hands such Offered Senior Subordinated Debt Securities are valid
obligations of the Company;
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provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Offered Senior Subordinated Debt Securities
have given any request, demand, authorization, direction, notice, consent or
waiver under the Senior Subordinated Indenture, (a) the principal amount of an
Offered Senior Subordinated Debt Security denominated in one or more foreign
currencies or currency units shall be the U.S. dollar equivalent, determined in
the manner provided as contemplated by Section 3.01 of the Senior Subordinated
Indenture on the Issue Date, of the principal amount of such Offered Senior
Subordinated Debt Security, and (b) Offered Senior Subordinated Debt Securities
owned by the Company or any other obligor of the Offered Senior Subordinated
Debt Securities or any Subsidiary of the Company or of such other obligor shall
be disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Offered Senior
Subordinated Debt Securities which the Trustee knows to be so owned shall be so
disregarded. Offered Senior Subordinated Debt Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Offered Senior Subordinated Debt Securities and that the
pledgee is not the Company or any other obligor upon the Offered Senior
Subordinated Debt Securities or any Subsidiary of the Company or of such other
obligor.
"Paying Agent" means any Person, including the Company, authorized by
the Company to pay the principal of or any interest on any Offered Senior
Subordinated Debt Security.
"Permitted Investment" of any Person means any Investment of such
Person in (i) direct obligations of the United States or any agency thereof or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within 180 days of the date of acquisition thereof, (ii) certificates
of deposit maturing within 180 days of the date of acquisition thereof issued by
a bank, trust company or savings and loan association which is organized under
the laws of the United States or any state thereof having capital, surplus and
undivided profits aggregating in excess of $250 million and a Keefe Bank Watch
Rating of C or better (or a similar rating by any successor thereof), (iii)
certificates of deposit maturing within 180 days of the date of acquisition
thereof issued by a bank, trust company or savings and loan association
organized under the laws of the United States or any state thereof other than
banks, trust companies or savings and loan associations satisfying the criteria
in (ii) above; provided that the aggregate amount of all certificates of deposit
issued to the Company at any one time by such bank, trust company or savings and
loan association will not exceed $100,000, (iv) commercial paper given the
highest rating by two established national credit rating agencies and maturing
not more than 180 days from the date of the acquisition thereof, (v) repurchase
agreements or money-market accounts which are fully secured by direct
obligations of the United States or any agency thereof and (vi) in the case of
the Company and its Subsidiaries, any receivables or loans taken by the Company
or a Subsidiary in connection with the sale of any asset otherwise permitted by
the Senior Subordinated Indenture.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, incorporated or unincorporated association, joint
stock company, trust, unincorporated organization or government or other agency
or political subdivision thereof or other entity of any kind.
"Place of Payment", when used with respect to the Offered Senior
Subordinated Debt Securities, means the place or places where the principal of
and interest on the Offered Senior Subordinated Debt Securities are payable.
"Preferred Stock" of any Person means all Capital Stock of such Person
which has a preference in liquidation or with respect to the payment of
dividends.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances
or extends any Existing Indebtedness or other Indebtedness permitted to be
Incurred by the Company or its Restricted Subsidiaries pursuant to the terms of
the Senior Subordinated Indenture, but only to the extent that (i) the
Refinancing Indebtedness is subordinated to the Offered Senior Subordinated Debt
Securities to the same extent as the Indebtedness being refunded, refinanced or
extended, if at all, (ii) the Refinancing Indebtedness is scheduled to mature
either (a) no earlier than the Indebtedness being refunded, refinanced or
extended, or (b) after the maturity date of the Offered Senior Subordinated Debt
Securities, (iii) the portion, if any, of the Refinancing Indebtedness
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that is scheduled to mature on or prior to the Maturity date of the Offered
Senior Subordinated Debt Securities has a Weighted Average Life to Maturity at
the time such Refinancing Indebtedness is Incurred that is equal to or greater
than the Weighted Average Life to Maturity of the portion of the Indebtedness
being refunded, refinanced or extended that is scheduled to mature on or prior
to the Maturity date of the Offered Senior Subordinated Debt Securities, (iv)
such Refinancing Indebtedness is in an aggregate amount that is equal to or less
than the aggregate amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (v) such Refinancing Indebtedness is Incurred
by the same Person that initially Incurred the Indebtedness being refunded,
refinanced or extended, except that the Company may Incur Refinancing
Indebtedness to refund, refinance or extend Indebtedness of any Restricted
Subsidiary, and (vi) such Refinancing Indebtedness is Incurred within 180 days
before or after the Indebtedness being refunded, refinanced or extended is so
refunded, refinanced or extended; provided that Refinancing Indebtedness shall
include the amount of any Indebtedness under the Existing Credit Facility which
is Incurred within 180 days before or after the repayment of an equal amount of
Indebtedness under the Existing Credit Facility which was Incurred pursuant to
the provisions of the Senior Subordinated Indenture described in the first
paragraph under the caption "-- Limitations on Additional Indebtedness."
"Registrar" has the meaning set forth in the "Registration,
Registration of Transfer and Exchange" section of the Senior Subordinated
Indenture.
"Restricted Investment" with respect to any Person means any Investment
(other than any Permitted Investment) by such Person in any (i) of its
Affiliates, (ii) executive officer or director of any Affiliate of such Person,
or (iii) other Person other than a Restricted Subsidiary which is a Wholly Owned
Subsidiary of the referent Person; provided, however, that with respect to the
Company and its Restricted Subsidiaries, any loan or advance to an executive
officer or director of the Company or a Subsidiary will not constitute a
Restricted Investment provided such loan or advance is made in the ordinary
course of business consistent with past practices, and, if such loan or advance
exceeds $100,000 (other than a readily marketable mortgage loan not exceeding
$500,000), such loan or advance has been approved by the Board of Directors of
the Company or a disinterested committee thereof.
"Restricted Payment" with respect to any Person means (i) the
declaration of any dividend or the making of any other payment or distribution
of cash, securities or other property or assets in respect of such Person's
Capital Stock (except that a dividend payable solely in Capital Stock (other
than Disqualified Stock) of such Person will not constitute a Restricted
Payment), (ii) any payment on account of the purchase, redemption, retirement or
other acquisition for value of such Person's Capital Stock or any other payment
or distribution made in respect thereof (other than payments or distributions
excluded from the definitions of Restricted Payment in clause (i) above), either
directly or indirectly, (iii) any Restricted Investment, and (iv) any principal
payment, redemption, repurchase, defeasance or other acquisition or retirement
of any Indebtedness of any Unrestricted Subsidiary or of Indebtedness of the
Company or its Restricted Subsidiaries which is subordinated in right of payment
to the Offered Senior Subordinated Debt Securities (provided, however, that the
payment, redemption, repurchase, defeasance or other acquisition or retirement
of any such subordinated Indebtedness by the Company or any Restricted
Subsidiary on its scheduled final Maturity date or on any other scheduled date
for the payment of any installment of principal thereof (whether pursuant to a
sinking fund, mandatory redemption or otherwise) shall not be a Restricted
Payment); provided, further, that with respect to the Company and its
Subsidiaries, Restricted Payments will not include (a) any payment or other
obligation described in clause (i), (ii) or (iii) above made to, or on behalf of
or for the benefit of, the Company or any of its Restricted Subsidiaries which
are Wholly Owned Subsidiaries by any of the Company's Subsidiaries, or (b) any
proportionate payment in respect of minority interests in Restricted
Subsidiaries of the Company to the extent that the payment constitutes a return
of capital that was not included in the Company's shareholders' equity or a
dividend or similar distribution not included in determining the Company's
Consolidated Net Income, or (c) any principal payment, redemption, repurchase,
defeasance or other acquisition or retirement of Indebtedness of the Company or
its Restricted Subsidiaries which is subordinated to the Offered Senior
Subordinated Debt Securities if the consideration therefor consists solely of,
or is the proceeds from, Indebtedness subordinated to the Offered Senior
Subordinated Debt Securities to the same extent as the Indebtedness being paid,
redeemed, repurchased, defeased or otherwise acquired or retired, or (d) any
principal payment, redemption, repurchase, defeasance or other acquisition or
retirement of Indebtedness or Capital Stock of such Person or its Subsidiaries
if the consideration therefor consists solely of Capital Stock (other
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than Disqualified Stock) of such Person, or the proceeds from such sale of such
Capital Stock, or (e) any loans or advances by the Company or any Restricted
Subsidiary to Unrestricted Subsidiaries which in an aggregate amount at any one
time outstanding do not exceed $50,000,000 or (f) any principal payment,
redemption repurchase, defeasance, or other acquisition or retirement of the
Debentures.
"Restricted Subsidiary" means each of the Subsidiaries of the Company
which is not an Unrestricted Subsidiary.
"Security Register" has the meaning set forth in the "Registration,
Registration of Transfer and Exchange" section of the Senior Subordinated
Indenture.
"Stated Maturity", when used with respect to any Offered Senior
Subordinated Debt Security or any installment of principal thereof or interest
thereon, means the date specified in such Offered Senior Subordinated Debt
Security as the fixed date on which the principal of such Offered Senior
Subordinated Debt Security or such installment of principal or interest is due
and payable.
"Subsidiary" of any Person means any (i) corporation of which at least
a majority of the aggregate voting power of all classes of the Common Equity is
directly or indirectly beneficially owned by such Person, and (ii) entity other
than a corporation of which such Person directly or indirectly beneficially owns
at least a majority of the Common Equity.
"Trustee" means the Person named as Trustee in the first paragraph of
the Senior Subordinated Indenture until a successor Trustee shall have become
such pursuant to the applicable provisions of the Senior Subordinated Indenture,
and thereafter "Trustee" shall mean or include each Person who is then a Trustee
thereunder.
"Unrestricted Subsidiary" means each of the Subsidiaries of the Company
so designated by a Board Resolution. The Board of Directors of the Company may
designate an Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that (i) any such redesignation will be deemed to be an Incurrence by the
Company and its Restricted Subsidiaries of the Indebtedness (if any) of such
redesignated Subsidiary for purposes of the provisions of the Senior
Subordinated Indenture described under the caption "--Limitations on Additional
Indebtedness" as of the date of such redesignation and (ii) immediately after
giving effect to such redesignation and the Incurrence of any such additional
Indebtedness, the Company and its Restricted Subsidiaries could Incur $1.00 of
additional Indebtedness under the ratio of the Company's Indebtedness (excluding
Non-Recourse Indebtedness) to Consolidated Tangible Net Worth set forth in the
first paragraph under the caption "--Limitations on Additional Indebtedness."
Subject to the foregoing, the Board of Directors of the Company also may
designate any Restricted Subsidiary to be an Unrestricted Subsidiary; provided
that (i) all previous Investments by the Company and its Restricted Subsidiaries
in such Restricted Subsidiary will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the provisions of the Senior Subordinated Indenture described
under the caption "--Limitations on Restricted Payments" and (ii) immediately
after giving effect to such designation and reduction of amounts available for
Restricted Payments under such provisions, the Company and its Restricted
Subsidiaries could Incur $1.00 of additional Indebtedness under the ratio of the
Company's Indebtedness (excluding Non-Recourse Indebtedness) to Consolidated
Tangible Net Worth set forth in the first paragraph under the caption
"--Limitations on Additional Indebtedness." Any such designation or
redesignation by the Board of Directors of the Company will be evidenced to the
Trustee by the filing with the Trustee of a Board Resolution giving effect to
such designation or redesignation and an Officers' Certificate certifying that
such designation or redesignation complied with the foregoing conditions and
setting forth the underlying calculations of such Officers' Certificate.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or portion thereof, at any date, the number of years obtained by
dividing (i) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payment of principal, including, without limitation, payment at final maturity,
in respect thereof, by (b) the number of years (calculated to the
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nearest one-twelfth) that will elapse between such date and the making of such
payment by (ii) the then outstanding principal amount of such Indebtedness or
portion thereof.
"Wholly Owned Subsidiary" of any Person means (i) a Subsidiary, of
which 100 percent of the Common Equity (except for directors' qualifying shares
or certain minority interests owned by other Persons solely due to local law
requirements that there be more than one stockholder, but which interest is not
in excess of what is required for such purpose) is owned directly by such Person
or through one or more other Wholly Owned Subsidiaries of such Person, or (ii)
any entity other than a corporation in which such Person, directly or
indirectly, owns all of the Common Equity of such entity.
REDEMPTION
If and to the extent set forth in the applicable Prospectus Supplement,
the Company will have the right to redeem any class of Offered Debt Securities,
in whole or from time to time in part, after the date and at the redemption
prices set forth in the applicable Prospectus Supplement.
EVENTS OF DEFAULT
Except as may be described in the accompanying Prospectus Supplement,
an "Event of Default" will be defined in each Indenture for the Offered Debt
Securities as any of the following events (whatever the reason for such Event of
Default and whether it will be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or any order of any court
or any order, rule or regulation of any administrative or governmental body):
(i) the failure by the Company to pay interest on any such
Offered Debt Security when the same becomes due and payable and the
continuance of any such failure for a period of 30 days;
(ii) the failure by the Company to pay the principal of any
such Offered Debt Security when the same becomes due and payable at
Maturity, upon acceleration or otherwise;
(iii) the failure by the Company to make any sinking fund
payment when the same becomes due and payable;
(iv) the failure by the Company to comply with any of its
agreements or covenants in, or provisions of, such Offered Debt
Security or the applicable Indenture relating to such Offered Debt
Security (other than an agreement or covenant a default in whose
performance or whose breach is elsewhere in such Indenture specifically
dealt with) and such failure continues for the period and after the
notice specified below;
(v) the acceleration of any indebtedness for borrowed money
or guarantees thereof (other than Non-Recourse Indebtedness (as defined
in the applicable Indenture)) of the Company or any of its subsidiaries
that has an outstanding principal amount of $10,000,000 or more in the
aggregate; provided that, in the event any such acceleration is
withdrawn or otherwise rescinded within a period of five days after
such acceleration by the holders of such indebtedness, any Event of
Default under the provisions of the applicable Indenture described in
this clause (v) relating to such Offered Debt Securities will be deemed
to be cured and any acceleration under such Indenture will be deemed
withdrawn or rescinded;
(vi) the failure by the Company or any of its subsidiaries to
make any principal or interest payment in respect of indebtedness for
borrowed money or guarantees thereof (other than Non-Recourse
Indebtedness) of the Company or any of its subsidiaries with an
outstanding aggregate principal amount of $10,000,000 or more within
five days of such principal or interest payment becoming due and
payable (after giving effect to any applicable grace period set forth
in the documents governing such indebtedness);
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(vii) a final judgment or judgments that exceed $10,000,000
or more in the aggregate, for the payment of money, having been entered
by a court or courts of competent jurisdiction against the Company or
any of its subsidiaries and such judgment or judgments are not
satisfied, stayed, annulled or rescinded within 60 days of being
entered;
(viii) the Company or any Material Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(ix) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Material
Subsidiary as debtor in an involuntary case,
(B) appoints a Custodian of the Company or any
Material Subsidiary or a Custodian for all or substantially
all of the property of the Company or any Material Subsidiary,
or
(C) orders the liquidation of the Company or any
Material Subsidiary,
and the order or decree remains unstayed and in effect for 60
days; or
(x) any other Event of Default provided in the
supplemental indenture under which the applicable class of Offered Debt
Securities are issued or in the form of such Offered Debt Security.
For purposes hereof, "Material Subsidiary" means any subsidiary of the
Company which accounted for three percent or more of the consolidated tangible
net assets or consolidated cash flow available for fixed charges of the Company
on a consolidated basis for the fiscal year ending immediately prior to any
default or Event of Default, all computed in accordance with generally accepted
accounting principles.
The Indentures relating to the Offered Debt Securities will provide
that the Trustee will not be deemed to know of a default unless a trust officer
has actual knowledge of such default or receives written notice of such default
with specific reference to such default.
The Indentures relating to the Offered Debt Securities will provide
that a default as described in sub-clause (iv) above is not an Event of Default
until the Trustee notifies the Company, or the holders of at least 25 percent in
aggregate principal amount of the then outstanding applicable class of Offered
Debt Securities under such Indenture, or such other percentage as may be
specified in the applicable Prospectus Supplement, notify the Company and the
Trustee, of the default and the Company does not cure the default within 60 days
after receipt of the notice, or for such other period as may be specified in the
applicable Prospectus Supplement. The notice must specify the default, demand
that it be remedied and state that the notice is a "Notice of Default." If such
a default is cured within the applicable time period, it ceases.
Except to the extent otherwise stated in the applicable Prospectus
Supplement, the Indentures for each class of Offered Debt Securities will
provide that if an Event of Default (other than an Event of Default described in
sub-clause (viii) or (ix) above) shall have occurred and be continuing under the
Indenture, the Trustee (after receiving indemnities from the holders of such
Offered Debt Securities to its satisfaction) by notice to the
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<PAGE> 48
Company, or the holders of at least 25 percent in principal amount of such
Offered Debt Securities then outstanding, or such other percentage as may be
specified in the Prospectus Supplement, by notice to the Company and the
Trustee, may declare all of such Offered Debt Securities to be due and payable
immediately. Upon such declaration, the amounts due and payable on such Offered
Debt Securities, as determined pursuant to the provisions of the "Acceleration"
section of the Indenture, will be due and payable immediately. Except to the
extent otherwise stated in the Prospectus Supplement, the Indentures for the
Offered Debt Securities will provide that if an Event of Default described in
sub-clause (viii) or (ix) above occurs, such Offered Debt Securities will ipso
facto become and be immediately due and payable without any declaration, notice
or other act on the part of the Trustee and the Company or any holder. The
holders of a majority in principal amount of such Offered Debt Securities then
outstanding, or such other percentage as may be specified in the applicable
Prospectus Supplement, by written notice to the Trustee and the Company, may
waive such Event of Default, rescind an acceleration and its consequences
(except an acceleration due to nonpayment of principal of or interest on such
Offered Debt Securities) if the rescission would not conflict with any judgment
or decree and if all existing Events of Default have been cured or waived.
Except to the extent otherwise stated in the applicable Prospectus
Supplement, the Indentures for the Offered Debt Securities will contain a
provision entitling the Trustee, subject to the duty of the Trustee during a
default to act with the required standard of care, to be indemnified by the
holders of the applicable class of Offered Debt Securities before proceeding to
exercise any right or power under the Indenture at the request of such holders.
Subject to such provisions in the Indentures for the Offered Debt Securities for
the indemnification of the Trustee and certain other limitations, the holders of
a majority in principal amount of the applicable class of Offered Debt
Securities then outstanding, or such other percentage as may be specified in the
applicable Prospectus Supplement, may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee. The Trustee may withhold from the
holders of such Offered Debt Securities notice of any continuing default or
Event of Default (except any default or Event of Default in payment of principal
or interest on the Offered Debt Securities) if the Trustee determines that
withholding such notice is in the holders' interest.
Except to the extent otherwise stated in the applicable Prospectus
Supplement, the Indentures for the Offered Debt Securities will provide that no
holder of Offered Debt Securities may institute any action against the Company
under the Indenture unless (i) such holder previously has given the Trustee
written notice of the default and continuance thereof, (ii) the holders of not
less than 25 percent in principal amount of the applicable class of Offered Debt
Securities then outstanding, or such other percentage as may be specified in the
applicable Prospectus Supplement, have requested the Trustee to institute such
action and offered the Trustee reasonable indemnity, (iii) the Trustee has not
instituted such action within 60 days of the request and (iv) the Trustee has
not received direction inconsistent with such written request from the holders
of a majority in principal amount of such Offered Debt Securities then
outstanding, or such other amount as may be specified in the applicable
Prospectus Supplement. Notwithstanding any other provision of the applicable
Indenture, the right of any holder of the applicable class of Offered Debt
Securities to receive payment of principal and interest on such Offered Debt
Security on or after the respective due dates thereof, or, subject to the
provisions of the applicable Indenture described in the preceding sentence, to
bring suit for the enforcement of any such payment on or after such respective
dates, will not be impaired or affected without the consent of such holder.
The Indentures and the Offered Debt Securities will provide that no
director, officer or employee of the Company, as such, will have any liability
for any obligations of the Company under the Offered Debt Securities or the
Indentures. The Indentures and the Offered Debt Securities will also each
provide that each holder of the Offered Debt Securities, by accepting the
Offered Debt Securities, waives and releases all such liability.
Except to the extent otherwise stated in the Prospectus Supplement, the
Indentures for the Offered Debt Securities will provide that the Company will be
required to deliver to the Trustee an annual statement regarding compliance with
the Indenture, and include in such statement, if any officer of the Company is
aware of any default or Event of Default, a statement specifying such default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto. In addition, the Company will be required to deliver to the
Trustee prompt written notice of the occurrence of any default or Event of
Default.
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company can discharge or defease its obligations under the
Indentures for the Offered Debt Securities as set forth below.
The Company may discharge certain obligations to holders of the Notes
that have not already been delivered to the Trustee for cancellation and that
have either become due and payable or are by their terms due and payable within
one year by irrevocably depositing with the Trustee cash or U.S. Government
Obligations, or a combination thereof, as trust funds in an amount sufficient to
pay at maturity the principal of and interest on the Notes.
The Company may also discharge any and all of its obligations to
holders of the Offered Debt Securities at any time ("defeasance"), but may not
thereby avoid its duty to register the transfer or exchange of the Offered Debt
Securities, to replace any temporary, mutilated, destroyed, lost or stolen Notes
or to maintain an office or agency in respect of the Offered Debt Securities and
certain other obligations. Alternatively, the Company may be released with
respect to the Offered Debt Securities from the obligations imposed by certain
covenants of the Senior Indenture or the Senior Subordinated Indenture described
under the caption "-- Certain Covenants of the Company", "-- Senior Indenture
Covenants" and "-- Senior Subordinated Indenture Covenants" herein and omit to
comply with such covenants without creating an Event of Default ("covenant
defeasance"). Defeasance or covenant defeasance may be effected only if, among
other things: (a) the Company irrevocably deposits with the Trustee cash or U.S.
Government Obligations, or a combination thereof, as trust funds in an amount
certified to be sufficient to pay at maturity the principal of and interest on
all outstanding Notes; (b) no Event of Default under the Offered Debt Securities
has occurred and is then continuing; (c) the defeasance or covenant defeasance
will not result in an event of default under any agreement to which the Company
is a party or by which it is bound; and (d) the Company delivers to the Trustee
an opinion of counsel to the effect that the holders of the Offered Debt
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or covenant defeasance will not
otherwise alter such holders' federal income tax treatment of principal and
interest payments on the Offered Debt Securities.
For purposes hereof, "U.S. Government Obligations" means (i) any
security that is (a) a direct obligation of the United States for the payment of
which the full faith and credit of the United States is pledged or (b) an
obligation of a person controlled or supervised by and acting as an agency or
instrumentality of the United States the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States, which, in
either case (a) or (b), is not callable or redeemable at the option of the
issuer thereof, and (ii) any depositary receipt issued by a bank (as defined in
Section 3(a) (2) of the Securities Act) as custodian with respect to any U.S.
Government Obligation specified in clause (i) and held by such custodian for the
account of the holder of such depositary receipt, or with respect to any
specific payment of principal of or interest on any such U.S. Government
Obligation; provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depositary receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of principal or interest
evidenced by such depositary receipt.
TRANSFER AND EXCHANGE
A holder of an Offered Debt Security will be able to transfer or
exchange the Offered Debt Securities only in accordance with the provisions of
the applicable Indenture. The registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by such Indenture.
MODIFICATIONS TO THE INDENTURES
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that the
Company and the Trustee may enter into supplemental indentures without the
consent of the holders of Offered Debt Securities to, among other things: (i)
cure any ambiguity, defect or inconsistency in the applicable Indenture for such
Offered Debt Securities; (ii) comply with the
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"Limitations on Mergers and Consolidations" section set forth in such Indenture;
(iii) provide for uncertificated Offered Debt Securities in addition to
certificated Offered Debt Securities; (iv) make any change that does not
adversely affect the legal rights under the Indenture of holders of Offered Debt
Securities; (v) add to the covenants of the Company for the benefit of the
holders of Offered Debt Securities or to surrender any right or power in the
Indenture conferred upon the Company; (vi) add any additional Events of Default
for the benefit of the holders of Offered Debt Securities; (vii) change or
eliminate any of the provisions of each Indenture before Offered Debt Securities
are issued thereunder; (viii) establish the form or terms of the Offered Debt
Securities; (ix) evidence and provide for the acceptance of appointment under
the Indenture of a successor Trustee with respect to the Offered Debt Securities
and to add to or change any of the provisions of the Indenture as shall be
necessary to provide for or facilitate the administration of the trusts under
the Indenture by more than one Trustee; (x) supplement any of the provisions of
the Indentures to such extent as shall be necessary to permit or facilitate the
defeasance or discharge of Offered Debt Securities pursuant to the applicable
Indenture; provided that any such action shall not adversely affect the
interests of the holders of Offered Debt Securities; or (xi) comply with the
qualification of the Indenture under the TIA.
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the Indentures for the Offered Debt Securities also will contain
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in principal amount of each class of Offered
Debt Securities outstanding, or such other percentage as may be specified in the
applicable Prospectus Supplement, to add any provision to, change in any manner
or eliminate any of the provisions of the Indentures for the Offered Debt
Securities or modify in any manner the rights of the holders of the Offered Debt
Securities so affected; provided that the Company and the Trustee may not,
without the consent of the holder of each outstanding Offered Debt Security
affected thereby, do, among other things, any of the following: (i) change the
stated maturity of the principal of, or any installment of principal of, or
interest on, any Offered Debt Security, or reduce the principal amount thereof
or the rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where any Offered Debt Security or
interest thereon is payable, or change the coin or currency in which any Offered
Debt Security or interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the stated maturity
thereof (or, in the case of redemption or repayment at the option of the holder,
on or after the redemption date or repayment date); (ii) reduce the percentage
in principal amount of the outstanding Offered Debt Securities, the consent of
whose holders is required for any such amendment, or the consent of whose
holders is required for any waiver of compliance with certain provisions of the
Indenture or certain defaults thereunder and their consequences provided for in
the Indenture; (iii) modify Section 13.02(d)(iii) or 8.07 of the Indentures; or
(iv) modify the ranking or priority of the Offered Debt Securities in a manner
adverse to the holders of Offered Debt Securities. The Senior Subordinated
Indenture and the Subordinated Indenture may not be amended to alter the
subordination of any outstanding Senior Subordinated Debt Securities or
Subordinated Debt Securities without the consent of each holder of Senior
Indebtedness then outstanding that would be adversely affected thereby.
Except as provided in the applicable Prospectus Supplement, the holders
of at least a majority in principal amount of each class of the then outstanding
Offered Debt Securities may on behalf of the holders of all Offered Debt
Securities, or such other amount as may be specified in the applicable
Prospectus Supplement, waive (i) insofar as the Offered Debt Securities are
concerned, compliance by the Company with certain covenants of the applicable
Indenture and (ii) any past default under the Indenture with respect to the
Offered Debt Securities, except a default in the payment of the principal of or
interest on any Offered Debt Security or in respect of a provision which under
the Indenture cannot be modified or amended without the consent of the holder of
each outstanding Offered Debt Security affected.
CONCERNING THE TRUSTEE
IBJ Schroder Bank & Trust Company is to be Trustee under each of the
Indentures and has been appointed by the Company as paying agent and registrar.
The Indenture will provide that upon execution and delivery of the Debt
Securities by the Company the Trustee shall authenticate and deliver the Debt
Securities in accordance with the order of the Company. IBJ Schroder Bank &
Trust Company is the trustee under the Indenture, dated as of June 21, 1993,
relating to the 1993 Senior Notes and the Indenture, dated as of February 16,
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1996, relating to the 1996 Senior Notes, and it or any other Trustee, or their
respective affiliates, may from time to time have lender or other business
arrangements with the Company. The Indentures will contain certain limitations
on the rights of the Trustee, should it or its affiliates become a creditor of
the Company, to obtain payment of claims in certain cases or to realize on
certain property received in respect of any such claim as security or otherwise.
The Trustee and its affiliates will be permitted to engage in other
transactions; however, if they acquire any conflicting interest, the conflict
must be eliminated or the Trustee must resign.
GOVERNING LAW
Unless otherwise specified in the accompanying Prospectus Supplement,
the Indentures for the Offered Debt Securities and the Offered Debt Securities
will be governed by the laws of the State of New York.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities offered hereby (i) through
agents, (ii) through underwriters, (iii) through dealers, (iv) directly to
purchasers (through a specific bidding or auction process or otherwise) or (v)
through a combination of any such methods of sale. The distribution of Debt
Securities may be effected from time to time in one or more transactions at a
fixed price or prices, which may be changed, or at market prices prevailing at
the time of sale, at prices relating to such prevailing market prices or at
negotiated prices.
Each Prospectus Supplement will set forth the terms of the offering of
the particular issuance of Debt Securities to which such Prospectus Supplement
relates, including (i) the name or names of any underwriters or agents with whom
the Company has entered into arrangements with respect to the sale of such Debt
Securities, (ii) the initial public offering or purchase price of such Debt
Securities, (iii) any underwriting discounts, commissions and other items
constituting underwriters' compensation from the Company and any other
discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to the Company, and (vi) the securities exchange, if any, on which
such Debt Securities will be listed.
If an underwriter or underwriters are utilized in the sale of Debt
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transactions, including
compensation of the underwriters and dealers, if any, will be set forth in the
applicable Prospectus Supplement, which will be used by the underwriters to make
resales of the Debt Securities.
If a dealer is utilized in the sale of Debt Securities, the Company
will sell such Debt Securities to the dealer, as principal. The dealer may then
resell such Debt Securities to the public at varying prices to be determined by
such dealer at the time of resale. The name of the dealer and the terms of the
transactions will be set forth in the applicable Prospectus Supplement relating
thereto.
Offers to purchase the Debt Securities may be solicited directly by the
Company and sales thereof may be made by the Company directly to institutional
investors or others. The terms of any such sales, including the terms of any
bidding or auction process, if utilized, will be described in the applicable
Prospectus Supplement.
Agents, underwriters and dealers may be entitled under agreements which
may be entered into with the Company to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and any
such agents, underwriters or dealers, or their affiliates may be customers of,
engage in transactions with or perform services for, the Company in the ordinary
course of business.
If so indicated in the applicable Prospectus Supplement, the Company
will authorize agents, underwriters and other persons to solicit offers by
certain institutions to purchase Debt Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the
49
<PAGE> 52
Company. The obligations of any purchaser under any such contract will be
subject to the condition that the purchase of the Debt Securities shall not at
the time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject. The underwriters and such other agents will not have
any responsibility in respect of the validity or performance of such contracts.
The Company may grant underwriters who participate in the distribution
of Debt Securities an option to purchase additional Debt Securities to cover
over-allotments, if any.
The place and date of delivery for Debt Securities in respect of which
this Prospectus is being delivered will be set forth in the applicable
Prospectus Supplement.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities in respect of which this Prospectus is being delivered will be a
new issue of securities, will not have an established trading market when issued
and will not be listed on any securities exchange. Any underwriters or agents to
or through whom such Debt Securities are sold by the Company for public offering
and sale may make a market in such Debt Securities, but such underwriters or
agents will not be obligated to do so and may discontinue any market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for any such Debt Securities.
LEGAL MATTERS
The legality of the Debt Securities will be passed upon for the Company
by Kaye, Scholer, Fierman, Hays & Handler, LLP, New York, New York. Certain
legal matters in connection with offerings made by this Prospectus may be passed
on for the underwriters, if any, by counsel named in the Prospectus Supplement.
EXPERTS
The audited financial statements of the Company and subsidiaries
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are so
included herein in reliance upon the authority of said firm as experts in giving
said reports.
50
<PAGE> 53
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, AGENT OR DEALER. THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND
ANY PROSPECTUS SUPPLEMENT SHALL NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THEREOF.
TABLE OF CONTENTS
PAGE
----
Available Information 2
Incorporation of Certain Information
by Reference 2
The Company 3
Use of Proceeds 3
Consolidated Ratio of Earnings to Fixed
Charges 3
Description of Debt Securities 4
Plan of Distribution 48
Legal Matters 49
Experts 49
================================================================================
================================================================================
U.S. HOME CORPORATION
$325,000,000
DEBT SECURITIES
PROSPECTUS
,199
================================================================================
<PAGE> 54
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 90,909.09
Accounting Fees and Expenses...................................... $ 60,000(1)
Blue Sky Fees and Expenses (including counsel fees)............... $ 5,000(1)
Legal Fees and Expenses........................................... $ 150,000(1)
Printing and Engraving Expenses................................... $ 50,000(1)
Trustee Fees and Expenses......................................... $ 30,000(1)
Rating Agency Fees................................................ $ 125,000(1)
Miscellaneous..................................................... $ 10,000(1)
-----------
Total........................................................ $520,909.09(1)
===========
</TABLE>
- ----------------
(1) Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), provides, as do the charters of many other
publicly held companies incorporated in the State of Delaware, that the personal
liability of directors of the Company to the Company is eliminated to the
maximum extent permitted by applicable law. The Certificate of Incorporation
provides for the indemnification of the directors, officers, employees, and
agents of the Company and its subsidiaries to the full extent that may be
permitted by applicable law from time to time. Certain provisions of the
Certificate of Incorporation protect the Company's directors against personal
liability for monetary damages resulting from breaches of their fiduciary duty
of care, except as set forth below. Under the Delaware General Corporation Law,
absent these provisions, directors could be held liable for gross negligence in
the performance of their duty of care but not for simple negligence. The
Company's directors remain liable for breaches of their duty of loyalty to the
Company and its stockholders, as well as for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law and
transactions from which a director derives improper personal benefit. The
Certificate of Incorporation also does not absolve directors of liability under
section 174 of the Delaware General Corporation Law, which makes directors
personally liable for unlawful dividends or unlawful stock repurchases or
redemptions in certain circumstances and expressly sets forth a negligence
standard with respect to such liability.
Under the Delaware General Corporation Law, directors, officers,
employees and other individuals may be indemnified against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with specified actions, suits, or proceedings, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
corporation -- a "derivative action") if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard of
care is applicable in the case of a derivative action, except that
indemnification only extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such an action, and the Delaware
General Corporation Law requires court approval before there can be any
indemnification of expenses where the person seeking indemnification has been
found liable to the Company.
The Certificate of Incorporation provides, among other things, that
each person who was or is made a party to, or is threatened to be made a party
to, or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding"), by reason of the
fact that he or she, or a person for whom he or she is the legal representative,
is or was a director or officer of the Company (or was serving at the request of
the Company as a director, officer, employee or agent for another entity), will
be indemnified and
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<PAGE> 55
held harmless by the Company to the fullest extent permitted by applicable law
as it presently exists or may be amended, against all expense, liability or loss
(including attorneys' fees), reasonably incurred by such person in connection
therewith. The Company will pay the expenses (including attorneys' fees)
incurred in defending any proceeding in advance of its final disposition.
However, the payment of expenses incurred by a director or officer in advance of
the final disposition of the proceeding will be made only upon receipt by the
Company of an undertaking by the director or officer to repay all amounts
advanced if it should be ultimately determined that the director or officer is
not entitled to be indemnified under the Certificate of Incorporation or
otherwise. The foregoing right of indemnification will not be deemed exclusive
of any other right to which those indemnified may be entitled against the
Company, and the Company may provide additional rights to such persons.
If a claim for indemnification or payment of expenses is not paid in
full within 60 days after a written claim therefor has been received by the
Company, the claimant may file suit to recover the unpaid amount of such claim
and, if successful in whole or in part, will be entitled to be paid the expense
of prosecuting such claim. In any such action, the Company will have the burden
of proving that the claimant was not entitled to the requested indemnification
or payment of expenses under applicable law.
The rights conferred on any person under the Certificate of
Incorporation will not be exclusive of any other rights which such person may
have or acquire under any statute, provision of the Certificate of
Incorporation, the Company's Amended and Restated By-Laws, agreement, vote of
stockholders of the Company or disinterested directors or otherwise.
The Company's obligation, if any, to indemnify any person who was or is
serving at its request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or nonprofit entity
will be reduced by any amount such person may collect as indemnification from
such other corporation, partnership, joint venture, trust, enterprise or
nonprofit entity.
Subject to the availability of insurance at substantially similar rates
for similar coverage (as determined in the sole discretion of the Company), the
Company will maintain insurance at (i) the levels in effect as of June 21, 1993
with respect to each director, officer, employee or agent of the Company until
June 21, 1996, or (ii) the levels in effect as of the date of the expiration of
the term, death, removal, retirement or resignation of any such person for a
period of three years after such event, whichever level is greater, in either
case, with respect to any proceeding by reason of the fact that such person, or
the person for whom he or she is the legal representative, is or was a director
or officer of the Company or is or was serving at the request of the Company as
a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by such
person at the Company's expense, to protect the Company and any such person
against any such liability, cost, payment or expense; provided, however, that
subject to the provisions described herein, the Company will only be required to
maintain insurance until the earlier of the date which is (a) three years after
the expiration of the term, death, removal, retirement or resignation of any
such person and (b) June 21, 1999.
Any repeal or modification of the provisions described above will not
adversely affect any right or protection under the Certificate of Incorporation
of any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
Under the Company's First Amended Consolidated Plan of Reorganization,
dated May 24, 1993, as modified (the "Plan"), and the confirmation order
relating thereto of the United States Bankruptcy Court for the Southern District
of New York, the obligations of the Company and each of its affiliates to
indemnify any person serving as one of its directors, officers or employees as
of or following April 15, 1991, by reason of such person's past or future
service in such a capacity, or as a director, officer, or employee of another
corporation, partnership, or other legal entity, to the extent provided in the
applicable certificate of incorporation, by-laws, or similar constituent
documents or by statutory law or written agreement of or with the Company or any
of its affiliates, were, except as provided below, deemed and treated as
executory contracts that were assumed by the Company or any of its affiliates
pursuant to the Plan and section 365 of the United States Bankruptcy Code, upon
the confirmation of the Plan. Accordingly, such indemnification obligations
survived and were unaffected by entry
II-2
<PAGE> 56
of the confirmation order with respect to the Plan, irrespective of whether such
indemnification is owed for an act or event occurring before or after April 15,
1991.
The Company entered into indemnification agreements effective as of
June 21, 1993 with each of its directors and officers. These indemnification
agreements provide for, among other things, the (i) indemnification by the
Company of the indemnitees thereunder to the extent described above and (ii)
advancement of attorneys' fees and other expenses. Accordingly, the Company will
in certain circumstances be obligated to indemnify its former directors and its
directors and officers from and after June 21, 1993, including as to matters
arising out of service as directors or officers of certain entities other than
the Company or any of its affiliates prior to June 21, 1993.
Certain of the Company's compensation and stock option plans provide
for the indemnification of certain of the Company's officers and directors in
connection with certain matters relating to such plans.
ITEM 16. EXHIBITS
(a) EXHIBITS
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- ------- -----------------------
2.1 First Amended Consolidated Plan of Reorganization of U.S. Home
Corporation and certain of i s affiliates dated April 1, 1993.
Incorporated by reference from exhibit 2.1 to U.S. Home Corporation's
Current Report on Form 8-K filed June 9, 1993.
2.2 Modification to First Amended Consolidated Plan of Reorganization of
U.S. Home Corporation and certain of its affiliates. Incorporated by
reference from exhibit 2.2 to U.S. Home Corporation's Current Report on
Form 8-K filed June 9, 1993.
2.3 First Amended Joint Plan of Reorganization of certain affiliates of
U.S. Home Corporation dated April 1, 1993. Incorporated by reference
from exhibit 2.3 to U.S. Home Corporation's Current Report on Form 8-K
filed June 9, 1993.
2.4 Findings of Fact, Conclusions of Law and Order Confirming the First
Amended Consolidated Plan of Reorganization of U.S. Home Corporation
and certain of its affiliates. Incorporated by reference from exhibit
28.1 to U.S. Home Corporation's Current Report on Form 8-K filed June
9, 1993.
2.5 Findings of Fact, Conclusions of Law and Order Confirming the First
Amended Joint Plan of Reorganization of certain affiliates of U.S. Home
Corporation. Incorporated by reference from exhibit 28.2 to U.S. Home
Corporation's Current Report on Form 8-K filed June 9, 1993.
4.1 Form of Senior Indenture by and between U.S. Home Corporation and IBJ
Schroder Bank & Trust Company, as trustee.(1)
4.2 Form of Senior Subordinated Indenture by and between U.S. Home
Corporation and IBJ Schroder Bank & Trust Company, as trustee.(1)
4.3 Form of Subordinated Indenture by and between U.S. Home Corporation and
IBJ Schroder Bank & Trust Company, as trustee.(1)
5.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP.(1)
12 Statements re: Computation of Ratio of Earnings to Fixed Charges.(1)
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<PAGE> 57
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- ------- -----------------------
23.1 Consent of Arthur Andersen LLP.(1)
23.2 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP. Included in
such firm's opinion filed as Exhibit 5.1.
24 Power of Attorney. Included on the signature page at Page II-6.
25.1 Statement of Eligibility under the Trust Indenture Act of 1939 of a
Corporation Designated to Act as Trustee on Form T-1.(1)
25.2 Statement of Eligibility under the Trust Indenture Act of 1939 of a
Corporation Designated to Act as Trustee on Form T-1.(1)
25.3 Statement of Eligibility under the Trust Indenture Act of 1939 of a
Corporation Designated to Act as Trustee on Form T-1.(1)
(1) Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, unless the
information required to be included in such post-effective
amendment is contained in a periodic report filed with or
furnished to the Securities and Exchange Commission by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 and incorporated herein by
reference;
(ii) To reflect in the Prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement, unless the information required to be
included in such post-effective amendment is contained in a
periodic report filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 and
incorporated herein by reference. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) (Section230.424(b) of this
chapter), if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the Registration Statement;
II-4
<PAGE> 58
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 15 above,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby further undertakes that:
(1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the
form of prospectus filed as a part of this registration
statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4), or 497(h) under the Securities Act of 1933
shall be deemed to be part of this registration statement as
of the time it was declared effective.
(2) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(e) The undersigned Registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee to act
under subsection (a) of section 310 of the Trust Indenture Act ("Act") in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
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<PAGE> 59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Amendment No. 2 to Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on August 22, 1997.
U.S. HOME CORPORATION
By: /s/ Chester P. Sadowski
-------------------------------
Chester P. Sadowski
Vice President - Controller and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
*
- ------------------------------- Chairman and Co-Chief August 22, 1997
Robert J. Strudler Executive Officer and
Director
*
- ------------------------------- President, Co-Chief Executive August 22, 1997
Isaac Heimbinder Officer, Chief Operating
Officer and Director
* Vice President -- August 22, 1997
- ------------------------------- Controller and Chief
Chester P. Sadowski Accounting Officer
* Vice President -- August 22, 1997
- ------------------------------- Corporate Finance
Thomas A. Napoli and Treasurer
(Principal Financial Officer)
* Director August 22, 1997
- -------------------------------
Glen Adams
* Director August 22, 1997
- -------------------------------
Steven L. Gerard
* Director August 22, 1997
- -------------------------------
Kenneth J. Hanau, Jr.
* Director August 22, 1997
- -------------------------------
Malcolm T. Hopkins
</TABLE>
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<PAGE> 60
SIGNATURE TITLE DATE
- --------- ----- ----
* Director August 22, 1997
________________________
Jack L. McDonald
* Director August 22, 1997
________________________
Charles A. McKee
* Director August 22, 1997
________________________
George A. Poole, Jr.
* Director August 22, 1997
________________________
Herve Ripault
* Director August 22, 1997
________________________
James W. Sight
*By Thomas A. Napoli , as attorney-in-fact
________________________
II-7
